UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2007~~March 31, 2008


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period fromto

Commission ~~File Number:~~file number: 1-11718

EQUITY LIFESTYLE PROPERTIES, INC.

(Exact ~~name~~Name of ~~registrant~~Registrant as ~~specified~~Specified in ~~its~~Its Charter)


Maryland		36-3857664
(State or ~~other jurisdiction~~Other Jurisdiction of ~~incorporation~~Incorporation or ~~organization)~~Organization)		(I.R.S. Employer Identification No.)

Two North Riverside Plaza, Suite 800, Chicago, Illinois		60606
(Address of ~~principal executive offices)~~Principal Executive Offices)		(Zip Code)

(312) 279-1400
(Registrant’s ~~telephone number, including area code)~~Telephone Number, Including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yesþ Noo

Indicate by check mark whether the ~~Registrant~~registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a ~~non-~~smaller reporting company. See the definitions of “large accelerated ~~filer. See definition of~~filer”, “accelerated ~~filer~~filer” and ~~large accelerated filer”~~“smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filerþ		Accelerated ~~filer~~o ~~Non-accelerated~~ filero		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting Companyo

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yeso Noþ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

~~24,359,037~~24,573,380 shares of Common Stock as of ~~October 30, 2007.~~May 5, 2008.

Equity LifeStyle Properties, Inc.

Consolidated Balance Sheets

As of ~~September 30, 2007~~March 31, 2008 and December 31, ~~2006~~2007

(amounts in ~~thousands)~~thousands, except share and per share data)


	September 30,						March 31,			December 31,
	2007			December 31,			2008			2007
	(unaudited)			2006			(unaudited)
Assets
Investment in real estate:
Land	$	534,978		$	531,302		$	542,004		$	541,000
Land improvements		1,688,797			1,664,964			1,706,760			1,700,888
Buildings and other depreciable property		150,839			141,194			155,554			154,227

		2,374,614			2,337,460			2,404,318			2,396,115
Accumulated depreciation		(480,401	)		(435,809	)		(510,546	)		(494,211	)

Net investment in real estate		1,894,213			1,901,651			1,893,772			1,901,904
Cash and cash equivalents		3,703			1,605			2,567			5,785
Notes receivable		11,346			22,045
Notes receivable, net								11,039			10,954
Investment in joint ventures		15,788			14,718			9,563			4,569
Rents receivable, net		1,267			1,294			909			1,156
Deferred financing costs, net		12,837			14,799			11,470			12,142
Inventory		66,082			70,091
Inventory, net								62,649			63,526
Escrow deposits and other assets		40,815			29,628			36,277			33,659

Total Assets	$	2,046,051		$	2,055,831		$	2,028,246		$	2,033,695


Liabilities and Stockholders’ Equity
Liabilities:
Mortgage notes payable and other loans	$	1,574,088		$	1,586,012
Mortgage notes payable							$	1,551,230		$	1,556,392
Unsecured lines of credit		97,900			131,200			82,100			103,000
Accrued payroll and other operating expenses		43,122			30,936			39,791			34,617
Accrued interest payable		8,878			9,066			8,948			9,164
Rents received in advance and security deposits		30,572			36,454			37,835			37,274
Distributions payable		4,528			2,251			6,070			4,531

Total Liabilities		1,759,088			1,795,919			1,725,974			1,744,978

Commitments and contingencies		—			—

Minority interest – Common OP Units and other		17,435			12,794
Minority interest – Perpetual Preferred OP Units		200,000			200,000
Minority interests – Common OP Units and other								20,117			17,776
Minority interests – Perpetual Preferred OP Units								200,000			200,000

Stockholders’ Equity:
Preferred stock, $.01 par value 10,000,000 shares authorized; none issued		—			—			—			—
Common stock, $.01 par value 100,000,000 shares authorized; 24,357,179 and 23,928,652 shares issued and outstanding for September 30, 2007 and December 31, 2006, respectively		236			229
Common stock, $.01 par value 100,000,000 shares authorized; 24,558,959 and 24,348,517 shares issued and outstanding for March 31, 2008 and December 31, 2007, respectively								237			236
Paid-in capital		310,391			304,483			314,203			310,803
Distributions in excess of accumulated earnings		(241,099	)		(257,594	)		(232,285	)		(240,098	)

Total Stockholders’ Equity		69,528			47,118
Total stockholders’ equity								82,155			70,941


Total Liabilities and Stockholders’ Equity	$	2,046,051		$	2,055,831		$	2,028,246		$	2,033,695

Equity LifeStyle Properties, Inc.

Consolidated Statements of Operations

For the Quarters Ended March 31, 2008 and ~~Nine Months Ended September 30,~~ 2007 ~~and 2006~~

(amounts in thousands, except share and per share data)

(unaudited)


	Quarters Ended						Nine Months Ended						Quarters Ended
	September 30,						September 30,						March 31,
	2007			2006			2007			2006			2008			2007
Property Operations:
Community base rental income	$	59,366		$	56,877		$	177,190		$	168,617		$	61,034		$	58,799
Resort base rental income		25,557			22,833			79,336			69,480			34,597			31,721
Utility and other income		9,273			7,539			28,551			23,445			10,791			10,100

Property operating revenues		94,196			87,249			285,077			261,542			106,422			100,620


Property operating and maintenance		33,252			30,125			95,681			87,229			33,769			31,189
Real estate taxes		7,037			6,780			21,646			20,122			7,440			7,358
Property management		4,576			4,301			13,940			13,526			5,294			4,658

Property operating expenses (exclusive of depreciation shown separately below)		44,865			41,206			131,267			120,877			46,503			43,205

Income from property operations		49,331			46,043			153,810			140,665			59,919			57,415

Home Sales Operations:
Gross revenues from inventory home sales		8,483			16,577			26,767			46,577			6,195			9,107
Cost of inventory home sales		(8,117	)		(15,125	)		(24,364	)		(41,229	)		(6,750	)		(8,117	)

Gross profit from inventory home sales		366			1,452			2,403			5,348
(Loss) Gross profit from inventory home sales														(555	)		990
Brokered resale revenues, net		305			448			1,248			1,723			367			493
Home selling expenses		(1,845	)		(2,472	)		(5,845	)		(7,386	)		(1,513	)		(2,251	)
Ancillary services revenues, net		799			700			2,223			2,706			1,448			1,540

(Loss) Income from home sales operations and other		(375	)		128			29			2,391			(253	)		772

Other Income (Expenses):
Interest income		496			595			1,458			1,434			387			537
Income from other investments, net		5,323			6,172			15,407			15,454			6,910			4,966
General and administrative		(3,795	)		(3,541	)		(11,146	)		(10,342	)		(5,399	)		(3,671	)
Rent control initiatives		(722	)		(201	)		(2,157	)		(499	)		(1,347	)		(436	)
Interest and related amortization		(25,942	)		(26,339	)		(77,420	)		(77,167	)		(24,984	)		(25,793	)
Depreciation on corporate assets		(116	)		(102	)		(337	)		(312	)		(98	)		(110	)
Depreciation on real estate assets		(15,901	)		(15,137	)		(47,232	)		(44,570	)		(16,274	)		(15,624	)


Total other expenses, net		(40,657	)		(38,553	)		(121,427	)		(116,002	)		(40,805	)		(40,131	)


Income before minority interests, equity in income of unconsolidated joint ventures and discontinued operations		8,299			7,618			32,412			27,054			18,861			18,056

Income allocated to Common OP Units		(966	)		(909	)		(4,333	)		(3,813	)		(3,001	)		(2,977	)
Income allocated to Perpetual Preferred OP Units		(4,031	)		(4,031	)		(12,101	)		(12,099	)		(4,032	)		(4,031	)
Equity in income of unconsolidated joint ventures		738			869			2,048			3,512			884			1,319

Income from continuing operations		4,040			3,547			18,026			14,654			12,712			12,367


Discontinued Operations:
Discontinued operations		96			30			234			497			57			120
Depreciation on discontinued operations		—			(21	)		—			(63	)
Gain (Loss) on sale from discontinued real estate		6,858			—			11,444			(192	)
(Income) allocated to Common OP Units from discontinued operations		(1,342	)		(2	)		(2,259	)		(50	)
(Loss) Gain on sale from discontinued real estate														(41	)		4,586
Income allocated to Common OP Units from discontinued operations														(3	)		(913	)

Income from discontinued operations		5,612			7			9,419			192			13			3,793

Net income available for Common Shares	$	9,652		$	3,554		$	27,445		$	14,846		$	12,725		$	16,160

Equity LifeStyle Properties, Inc.

Consolidated Statements of Cash Flows

For the ~~Nine Months~~Quarters Ended ~~September 30,~~March 31, 2008 and 2007 ~~and 2006~~

(amounts in thousands)

(unaudited)


	September 30,			September 30,			March 31,			March 31,
	2007			2006			2008			2007
Cash Flows From Operating Activities:
Net income	$	27,445		$	14,846		$	12,725		$	16,160
Adjustments to reconcile net income to cash provided by operating activities:
Income allocated to minority interests		18,693			15,962			7,024			7,921
(Gain) loss on sale of discontinued real estate		(11,444	)		192
Gain on sale of investment		—			(914	)
Loss (Gain) on sale of discontinued real estate								41			(4,586	)
Depreciation expense		48,658			46,411			16,961			16,100
Amortization expense		2,199			2,122			704			727
Debt premium amortization		(1,219	)		(1,074	)		(320	)		(403	)
Equity in income of unconsolidated joint ventures		(3,137	)		(4,979	)		(1,476	)		(1,685	)
Distributions from unconsolidated joint ventures		3,800			2,662			1,006			2,578
Amortization of stock-related compensation								1,593			938
Accrued long term incentive plan compensation		311			—			274			—
Amortization of stock-related compensation		3,195			2,320
Increase in provision for uncollectible rents receivable		70			75			163			112
Increase in provision for inventory reserve		123			—			314			15
Changes in assets and liabilities:
Rents receivable		(63	)		(217	)		84			(241	)
Inventory		2,447			(10,505	)		563			(1,627	)
Escrow deposits and other assets		(4,249	)		(321	)		(4,798	)		1,039
Accrued payroll and other operating expenses		11,270			12,910			(216	)		165
Rents received in advance and security deposits		(6,272	)		(1,841	)		5,398			4,799

Net cash provided by operating activities		91,827			77,649			40,040			42,012

Cash Flows From Investing Activities:
Acquisition of real estate		(19,108	)		(20,037	)		(3,984	)		(1,903	)
Disposition of real estate		20,536			9,000			—			7,725
Tax-deferred exchange deposit		(6,376	)		—
Net tax-deferred exchange withdrawal (deposit)								2,124			(3,655	)
Joint Ventures:
Investments in		(3,117	)		(1,567	)		(5,108	)		(1,479	)
Distributions from		114			1,647			—			114
Net repayment (borrowings) of notes receivable		10,699			(7,435	)
Net (borrowings) repayment of notes receivable								(85	)		6,962
Improvements:
Corporate		(511	)		(191	)		(17	)		(140	)
Rental properties		(12,282	)		(10,021	)		(2,153	)		(3,286	)
Site development costs		(9,093	)		(13,866	)		(2,014	)		(2,883	)

Net cash used in investing activities		(19,138	)		(42,470	)
Net cash (used in) provided by investing activities								(11,237	)		1,455

Cash Flows From Financing Activities:
Net proceeds from stock options and employee stock purchase plan		3,387			3,521			2,309			2,450
Distributions to Common Stockholders, Common OP Unitholders, and Perpetual Preferred OP Unitholders		(23,425	)		(17,298	)		(8,557	)		(6,334	)
Lines of credit:
Proceeds		81,100			141,900			39,800			16,600
Repayments		(114,400	)		(164,400	)		(60,700	)		(51,400	)
Principal repayments on disposition		(1,992	)		—			—			(1,992	)
Principal repayments and mortgage debt payoff		(14,951	)		(12,235	)		(4,841	)		(4,392	)
New financing proceeds		—			14,247
Debt issuance costs		(310	)		(1,524	)		(32	)		(4	)

Net cash used in financing activities		(70,591	)		(35,789	)		(32,021	)		(45,072	)

Net increase (decrease) in cash and cash equivalents		2,098			(610	)
Net decrease in cash and cash equivalents								(3,218	)		(1,605	)
Cash and cash equivalents, beginning of period		1,605			610			5,785			1,605

Cash and cash equivalents, end of period	$	3,703		$	—		$	2,567		$	—

Definition of Terms:

Equity LifeStyle Properties, Inc., a Maryland corporation, together with MHC Operating Limited Partnership (the “Operating Partnership”) and other consolidated subsidiaries (“Subsidiaries”), are referred to herein as the “Company,” “ELS,” “we,” “us,” and “our.” Capitalized terms used but not defined herein are as defined in the Company’s Annual Report on Form 10-K (“~~2006~~2007 Form 10-K”) for the year ended December 31, ~~2006.~~2007.

Presentation:

These unaudited Consolidated Financial Statements have been prepared pursuant to the Securities and Exchange Commission (“SEC”) rules and regulations and should be read in conjunction with the financial statements and notes thereto included in the ~~2006~~2007 Form 10-K. The following Notes to Consolidated Financial Statements highlight significant changes to the Notes included in the ~~2006~~2007 Form 10-K and present interim disclosures as required by the SEC. The accompanying Consolidated Financial Statements reflect, in the opinion of management, all adjustments necessary for a fair presentation of the interim financial statements. All such adjustments are of a normal and recurring nature. Revenues are subject to seasonal fluctuations and as such quarterly interim results may not be indicative of full year results.

Note 1 – Summary of Significant Accounting Policies

(a) Basis of Consolidation

The Company consolidates its majority-owned subsidiaries in which it has the ability to control the operations of the subsidiaries and all variable interest entities with respect to which the Company is the primary beneficiary. The Company also consolidates entities in which it has a controlling direct or indirect voting interest. All inter-company transactions have been eliminated in consolidation. The Company’s acquisitions were all accounted for as purchases in accordance with Statement of Financial Accounting Standards No. 141, “Business Combinations” (“SFAS No. 141”).

The Company has applied the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 46R, “Consolidation of Variable Interest Entities” (“FIN 46R”), – an interpretation of ~~Accounting Research Bulletin No. 51, “Consolidated Financial Statements” (“~~ARB ~~51”).~~51. The objective of FIN 46R is to provide guidance on how to identify a variable interest entity (“VIE”) and determine when the assets, liabilities, non-controlling interests, and results of operations of a VIE need to be included in a company’s consolidated financial statements. A company that holds variable interests in an entity will need to consolidate such entity if the company absorbs a majority of the entity’s expected losses or receives a majority of the entity’s expected residual returns if they occur, or both (i.e., the primary beneficiary). The Company has also applied Emerging Issues Task Force ~~Issue No.~~ 04-5 ~~“Investor’s~~– Accounting for ~~an Investment~~investments in ~~Limited Partnership When~~limited partnerships when the ~~Investor Is~~investor is the ~~Sole General Partner~~sole general partner and the ~~Limited Partners Have Certain Rights”~~limited partners have certain rights (“EITF 04-5”), which determines whether a general partner or the general partners as a group ~~control~~controls a limited partnership or similar entity and therefore should consolidate the entity. The Company will apply FIN 46R and EITF 04-5 to all types of entity ownership (general and limited partnerships and corporate interests).

The Company applies the equity method of accounting to entities in which the Company does not have a controlling direct or indirect voting interest or is not considered the primary beneficiary, but can exercise influence over the entity with respect to its operations and major decisions. The cost method is applied when ~~both~~ (i) the investment is minimal (typically less than 5%) and (ii) the Company’s investment is passive.

As of December 31, 2007, the Bar Harbor joint venture has been consolidated with the operations of the Company as the Company has determined that as of December 31, 2007 the company was the primary beneficiary by applying the standards of FIN 46R.

(b) Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Note 1 – Summary of Significant Accounting Policies (continued)

(c) Markets

The Company manages all of its operations on a property-by-property basis. Since each Property has similar economic and operational characteristics, the Company has one reportable segment, which is the operation of land lease Properties. The distribution of the Properties throughout the United States reflects our belief that geographic diversification helps insulate the portfolio from regional economic influences. The Company intends to target new acquisitions in or near markets where the Properties are located and will also consider acquisitions of Properties outside such markets.

(d) Inventory

Inventory ~~primarily~~ consists of new and used Site Set homes and is stated at the lower of cost or market after consideration of the N.A.D.A. (National Automobile Dealers Association) Manufactured Housing Appraisal Guide and the current market value of each home included in the home inventory. Inventory sales revenues and resale revenues are recognized when the home sale is closed. ~~Inventory is recorded net of an~~The expense for the inventory reserve is included in the cost of ~~$703,000 and $580,000 as~~home sales in our Consolidated Statements of ~~September 30, 2007 and December 31, 2006, respectively. Resale revenues are stated net of commissions paid~~Operations. (See Note 6 in the Notes to ~~employees of $655,000 and $949,000 for the nine months ended September 30, 2007 and 2006, respectively.~~Consolidated Financial Statements contained in this Form 10-Q.)

(e) Real Estate

In accordance with SFAS No. 141, we allocate the purchase price of Properties we acquire to net tangible and identified intangible assets acquired based on their fair values. In making estimates of fair values for purposes of allocating purchase price, we utilize a number of sources, including independent appraisals that may be available in connection with the acquisition or financing of the respective Property and other market data. We also consider information obtained about each Property as a result of our due diligence, marketing and leasing activities in estimating the fair value of the tangible and intangible assets acquired.

Real estate is recorded at cost less accumulated depreciation. Depreciation is computed on the straight-line basis over the estimated useful lives of the assets. We use a 30-year estimated life for buildings acquired and structural and land improvements, a ten-to-fifteen-year estimated life for building upgrades and a three-to-seven-year estimated life for furniture, fixtures and equipment. The values of ~~above~~above- and ~~below market~~below-market leases are amortized and recorded as either an increase (in the case of ~~below market~~below-market leases) or a decrease (in the case of ~~above market~~above-market leases) to rental income over the remaining term of the associated lease. The value associated with in-place leases is amortized over the expected term, which includes an estimated probability of lease renewal. Expenditures for ordinary maintenance and repairs are expensed to operations as incurred, and significant renovations and improvements that improve the asset and extend the useful life of the asset are capitalized and then expensed over the asset’s estimated useful life.

The Company periodically evaluates its long-lived assets, including our investments in real estate, for impairment indicators. Judgments regarding the existence of impairment indicators are based on factors such as operational performance, market conditions and legal factors. Future events could occur which would cause us to conclude that impairment indicators exist and an impairment loss is warranted.

For Properties to be disposed of, an impairment loss is recognized when the fair value of the Property, less the estimated cost to sell, is less than the carrying amount of the Property measured at the time the Company has a commitment to sell the Property and/or is actively marketing the Property for sale. A Property to be disposed of is reported at the lower of its carrying amount or its estimated fair value, less costs to sell. Subsequent to the date that a Property is held for disposition, depreciation expense is not recorded. The Company accounts for its Properties held for disposition in accordance with the Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS No. 144”). Accordingly, the results of operations for all assets sold or held for sale have been classified as discontinued operations in all periods presented.

Note 1 – Summary of Significant Accounting Policies (continued)

(f) Cash and Cash Equivalents

The Company considers all demand and money market accounts and certificates of deposit with maturity dates, when purchased, of three months or less to be cash equivalents.

(g) Notes Receivable

Notes receivable generally are stated at their outstanding unpaid principal balances net of any deferred fees or costs on originated loans, or unamortized discounts or premiums net of a valuation allowance. Interest income is accrued on the unpaid principal balance. Discounts or premiums are amortized to income using the interest method. In certain cases we finance the sales of homes to our customers (referred to as “Chattel Loans”) which loans are secured by the homes. The valuation allowance for the Chattel Loans is calculated based on a comparison of the outstanding principal balance of each note compared to the N.A.D.A. value and the current market value of the underlying manufactured home collateral.

(h) Investments in Joint Ventures

Investments in joint ventures in which the Company does not have a controlling direct or indirect voting interest, but can exercise significant influence over the entity with respect to its operations and major decisions, are accounted for using the equity method of accounting whereby the cost of an investment is adjusted for the Company’s share of the equity in net income or loss from the date of acquisition and reduced by distributions received. The income or loss of each entity is allocated in accordance with the provisions of the applicable operating agreements. The allocation provisions in these agreements may differ from the ownership interests held by each investor. Differences between the carrying amount of the Company’s investment in the respective entities and the Company’s share of the underlying equity of such unconsolidated entities are amortized over the respective lives of the underlying assets, as applicable.

(i) Income from Other Investments, net

Income from other investments, net primarily includes revenue relating to the Company’s ground leases with Privileged Access L.P. (“Privileged Access”). The ground leases with Privileged Access for approximately ~~24,100~~24,300 sites at 8182 of the Company’s Properties are accounted for in accordance with Statement of Financial Accounting Standards No. 13, Accounting for Leases. The Company recognized income related to these ground leases of approximately ~~$5.3~~$6.4 million and ~~$15.2~~$4.9 million for the ~~quarter~~quarters ended March 31, 2008 and ~~nine months ended September 30,~~ 2007, respectively.

(j) Insurance Claims

The Properties are covered against fire, flood, property damage, earthquake, windstorm and business interruption by insurance policies containing various deductible requirements and coverage limits. Recoverable costs are classified in other assets as incurred. Insurance proceeds are applied against the asset when received. Recoverable costs relating to capital items are treated in accordance with the Company’s capitalization policy. The book value of the original capital item is written off once the value of the impaired asset has been determined. Insurance proceeds relating to the capital costs are recorded as income in the period they are received.

Approximately 70 Florida Properties suffered damage from ~~the four~~five hurricanes that struck the state during ~~August~~2004 and ~~September 2004.~~2005. As of ~~October 19, 2007,~~April 22, 2008, the Company estimates its total ~~claim~~claims to ~~be $20.1 million~~exceed $21.0 million. The Company has made claims for full recovery of ~~which, approximately $18.9 million of claims, including business interruption, have been submitted~~these amounts, subject to ~~our insurance companies for reimbursement.~~deductibles. Through ~~September 30, 2007,~~March 31, 2008, the Company has made total expenditures of approximately ~~$15.5~~$18.0 million. Approximately $6.9 million ~~and may incur additional~~of these expenditures ~~to complete~~have been capitalized per the ~~work necessary to restore our Properties to their pre-hurricanes condition. The Company has reserved approximately $2.0 million related to these~~Company’s capitalization policy through March 31, 2008.

Note 1 – Summary of Significant Accounting Policies (continued)

expenditures ($0.7 million in 2005 and $1.3 million in 2004). Approximately $6.7 million of these expenditures have been capitalized per the Company’s capitalization policy through September 30, 2007.

Hurricane Wilma impacted approximately 33 Properties located in southern Florida in October 2005. As of October 19, 2007, approximately $4.4 million of claims have been submitted to our insurance company for reimbursement. Through September 30, 2007, the Company has made total expenditures of approximately $2.7 million and may incur additional costs in the future. Through September 30, 2007, $1.6 million has been charged to operations ($0.3 million in 2006 and $1.3 million in 2005) and $0.8 million was capitalized to fixed assets.

The Company has received proceeds from insurance carriers of approximately ~~$5.7~~$8.4 million through ~~September 30, 2007. Approximately $1.4~~March 31, 2008. The proceeds were accounted for in accordance with the Statement of Financial Accounting Standards No.5, “Accounting for Contingencies” (“SFAS No. 5”). During the quarter ended March 31, 2008, approximately $0.4 million and $1.5 million is included in other assets as a receivable from insurance providers as of September 30, 2007 and December 31, 2006, respectively. Subsequent to September 30, 2007, the Company received approximately $1.2 million in proceeds from insurance carriers. If the Company receives additional insurance proceeds in excess of our receivable balance the excess will behas been recognized as a gain on insurance recovery, which is net of approximately $0.1 million of contingent legal fees and included in ~~the~~income from other ~~income section of our consolidated income statement.~~investments, net.

On June 22, 2007, the Company filed a lawsuit related to some of the unpaid claims against certain insurance carriers and its insurance broker. See Note ~~10 – Commitments and Contingencies~~12 in the Notes to Consolidated Financial Statements contained in this Form 10-Q for further discussion of this lawsuit.

(k) Deferred Financing Costs

Deferred financing costs include fees and costs incurred to obtain long-term financing. The costs are being amortized over the terms of the respective loans on a level yield basis. Unamortized deferred financing fees are written-off when debt is retired before the maturity date. Upon amendment of the line of credit, unamortized deferred financing fees are accounted for in accordance with EITF No. 98-14, “Debtor’s Accounting for Changes in Line-of-Credit or Revolving-Debt Arrangements” (“EITF 98-14”). Accumulated amortization for such costs was ~~$9.6~~$11.0 million and ~~$9.4~~$10.3 million at ~~September 30, 2007~~March 31, 2008 and December 31, ~~2006,~~2007, respectively.

(l) ~~Subsequent Events~~

On October 11, 2007, we acquired a 305-site resort Property known as Tuxbury Resort, on approximately 193 acres in Amesbury, Massachusetts, including approximately 100 acres of potential expansion land. The purchase price was approximately $7.3 million and the seller provided financing of approximately $1.2 million that matures in January 2010.

~~(m)~~ Recent Accounting Pronouncements

In ~~June 2006,~~March 2008, the FASB issued ~~Interpretation~~Statement of Financial Accounting Standards No. ~~48, “Accounting for Uncertainty~~161, “Disclosure about Derivative Instruments and Hedging Activities” (“SFAS No. 161”), an amendment of SFAS No. 133. SFAS No. 161 is intended to enhance the disclosure framework in ~~Income Taxes,~~SFAS No. 133 by requiring objectives of using derivatives to be disclosed in terms of underlying risk and accounting designation. The statement requires a new tabular disclosure format as a way of providing a more complete picture of derivative positions and their effect during the reporting period. SFAS No. 161 is effective November 15, 2008 with early adoption recommended. The Company does not believe SFAS No. 161 will have an ~~interpretation~~impact on the consolidated financial statements.

In December 2007, the FASB issued Statement of ~~FAS 109,~~Financial Accounting ~~for Income Taxes”~~Standards No. 160, “Non-controlling Interests in Consolidated Financial Statements” (“~~FIN 48”~~SFAS No. 160”), an amendment of Accounting Research Bulletin No. 51. SFAS No. 160 seeks to ~~create a single model~~improve uniformity and transparency in reporting of the net income attributable to address accounting for uncertainty in tax positions. FIN 48 clarifies the accounting for income taxes by prescribing a minimum recognition threshold a tax position is required to meet before being recognizednon-controlling interests in the consolidated financial statements of the reporting entity. The statement requires, among other provisions, the disclosure, clear labeling and presentation of non-controlling interests in the Consolidated Balance Sheet and Consolidated Income Statement. SFAS No. 160 is effective January 1, 2009 with early adoption prohibited. The Company has not yet determined the impact, if any, that SFAS No. 160 will have on its consolidated financial statements. ~~FIN 48 also provides guidance~~

In December 2007, the FASB issued Statement of Financial Accounting Standard No. 141R, “Business Combinations,” (“SFAS No. 141R”). SFAS No. 141R replaces FASB Statement No. 141 but retains the fundamental requirements set forth in SFAS No. 141 that the acquisition method of accounting (also known as the purchase method) be used for all business combinations and for an acquirer to be identified for each business combination. SFAS No. 141R replaces, with limited exceptions as specified in the statement, the cost allocation process in SFAS No. 141 with a fair value based allocation process. SFAS No. 141R applies prospectively to business combinations for which the acquisition date is on ~~derecognition, measurement, classification, interest~~or after the beginning of the first annual reporting period beginning on or after December 15, 2008. Early application is not permitted. The Company has not yet determined the impact, if any, that SFAS No. 141R will have on its consolidated financial statements.

Note 1 – Summary of Significant Accounting Policies (continued)

In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, “The Fair Value Option for Financial Assets and ~~penalties,~~Financial Liabilities” (“SFAS No. 159”). SFAS No. 159 permits companies to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing companies with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting ~~in interim periods, disclosure and transition. FIN 48~~provisions. SFAS No. 159 is effective for fiscal years beginning after ~~December~~November 15, ~~2006. As required, the Company adopted FIN 48 as of January 1,~~ 2007. Companies are not allowed to adopt SFAS No. 159 on a retrospective basis unless they choose early adoption. The adoption of ~~FIN 48 did~~SFAS No. 159 is optional and the Company has not yet determined the impact, if any, that SFAS No. 159 will have on its consolidated financial statements.

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“SFAS No. 157”), which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS No. 157 does not require any ~~significant impact~~new fair value measurements, but provides guidance on how to measure fair value by providing a fair value hierarchy used to classify the ~~Company’s~~source of the information. This statement was effective for the Company beginning January 1, 2008. The Company does not expect that the adoption of SFAS No. 157 will have a material effect on its financial ~~position and results of operations.~~statements.

1112

Note 2 – Earnings Per Common Share

Earnings per common share are based on the weighted average number of common shares outstanding during each year. Statement of Financial Accounting Standards No. 128, “Earnings Per Share” (“SFAS No. 128”) defines the calculation of basic and fully diluted earnings per share. Basic and fully diluted earnings per share are based on the weighted average shares outstanding during each period and basic earnings per share exclude any dilutive effects of options, warrants and convertible securities. The conversion of OP Units has been excluded from the basic earnings per share calculation. The conversion of an OP Unit to a share of Common Stock has no material effect on earnings per common share.

The following table sets forth the computation of basic and diluted earnings per common share for the quarters ended March 31, 2008 and ~~nine months ended September 30,~~ 2007 ~~and 2006~~ (amounts in thousands):


	Quarters Ended				Nine Months Ended				Quarters Ended
	September 30,				September 30,				March 31,
	2007		2006		2007		2006		2008		2007
Numerators:
Income from Continuing Operations:
Income from continuing operations – basic	$	4,040	$	3,547	$	18,026	$	14,654	$	12,712	$	12,367
Amounts allocated to dilutive securities		966		909		4,333		3,813		3,001		2,977

Income from continuing operations – fully diluted	$	5,006	$	4,456	$	22,359	$	18,467	$	15,713	$	15,344


Income from Discontinued Operations:
Income from discontinued operations – basic	$	5,612	$	7	$	9,419	$	192	$	13	$	3,793
Amounts allocated to dilutive securities		1,342		2		2,259		50		3		913

Income from discontinued operations – fully diluted	$	6,954	$	9	$	11,678	$	242	$	16	$	4,706


Net Income Available for Common Shares – Fully Diluted:
Net income available for Common Shares – basic	$	9,652	$	3,554	$	27,445	$	14,846	$	12,725	$	16,160
Amounts allocated to dilutive securities		2,308		911		6,592		3,863		3,004		3,890

Net income available for Common Shares – fully diluted	$	11,960	$	4,465	$	34,037	$	18,709	$	15,729	$	20,050


Denominator:
Weighted average Common Shares outstanding – basic		24,148		23,474		24,065		23,396		24,200		23,910
Effect of dilutive securities:
Redemption of Common OP Units for Common Shares		5,836		6,160		5,881		6,189		5,828		5,971
Employee stock options and restricted shares		434		605		456		623		358		470

Weighted average Common Shares outstanding – fully diluted		30,418		30,239		30,402		30,209		30,386		30,351

~~Note 4 – Investment in Real Estate (continued)~~

~~assumed a first mortgage loan of approximately $3.5 million with an interest rate of 4.94% per annum, maturing in 2008. The remainder of~~ the ~~acquisition price, net of a credit for our existing 25% interest,~~Property was ~~funded with a withdrawal from the tax-deferred account established as a result of the sale of Lazy Lakes discussed below.~~

On January 10, 2007, the Company sold Lazy Lakes, a 100-site resort Property in the Florida Keys for proceeds of approximately $7.7 million and recognized a gain on sale of approximately $4.6 million. The proceeds were deposited in a tax-deferred exchange account and were subsequently used for the acquisitions of Winter Garden and Mesa Verde discussed above.leased to Privileged Access.

All acquisitions have been accounted for utilizing the purchase method of accounting, and, accordingly, the results of operations of acquired assets are included in the statements of operations from the dates of acquisition. Certain purchase price adjustments may be recorded within one year following the acquisitions.

The Company actively seeks to acquire additional Properties and currently is engaged in negotiations relating to the possible acquisition of a number of Properties. At any time these negotiations are at varying stages, which may include contracts outstanding, to acquire certain Properties, which are subject to satisfactory completion of our due diligence review.

As of ~~September 30, 2007,~~March 31, 2008, the Company had ~~three~~two Properties designated as held for disposition pursuant to SFAS No. 144. The Company determined that these Properties no longer met its investment criteria. As such, the results from operations of these ~~three Properties, one Property sold in July 2007, one Property sold in January 2007, and~~ two Properties ~~sold in April 2006~~ are classified as income from discontinued operations. The Company expects to sell these Properties for proceeds greater than their net book value. The Properties classified as held for disposition as of ~~September 30, 2007~~March 31, 2008 are listed in the table below.

Note 4 – Investment in Real Estate (continued)


Property	Location	Sites
Casa Village	Billings, MT		490
Creekside	Wyoming, MI		165
~~Holiday Village~~	~~Sioux City, IA~~		~~519~~

~~The remaining three Properties held for disposition were in various stages of negotiations and the Company expects to sell these Properties for proceeds greater than their net book value.~~

The following table summarizes the combined results of operations of the ~~three~~two Properties held for sale and ~~four~~three previously sold Properties for the quarters ended March 31, 2008 and ~~nine months ended September 30,~~ 2007, ~~and 2006,~~ respectively (amounts in thousands).


	Quarters Ended						Nine Months Ended						Quarters Ended
	September 30,						September 30,						March 31,
	2007			2006			2007			2006			2008			2007
Rental income	$	739		$	831		$	2,355		$	3,073		$	537		$	836
Utility and other income		54			66			191			262			42			65

Property operating revenues		793			897			2,546			3,335			579			901
Property operating expenses		(470	)		(602	)		(1,597	)		(2,084	)		288			550

Income from property operations		323			295			949			1,251			291			351

Income (loss) from home sales operations		8			2			(12	)		41
(Loss) Income from home sales operations														(3	)		3

Interest and Amortization		(235	)		(267	)		(703	)		(795	)		(231	)		(234	)
Depreciation		—			(21	)		—			(63	)		—			—

Total other expenses		(235	)		(288	)		(703	)		(858	)		(231	)		(234	)
Gain (Loss) on sale of property		6,858			—			11,444			(192	)

(Loss) Gain on sale of property														(41	)		4,586
Minority interest		(1,342	)		(2	)		(2,259	)		(50	)		(3	)		(913	)

Net income from discontinued operations	$	5,612		$	7		$	9,419		$	192
Income from discontinued operations													$	13		$	3,793

Note 5 – Investment in Joint Ventures

The Company recorded approximately ~~$2.0~~$0.9 million and ~~$3.5~~$1.3 million of net income from joint ventures, net of approximately ~~$1.1~~$0.6 million and ~~$1.5~~$0.4 million of depreciation expense for the ~~nine months~~quarters ended ~~September 30,~~March 31, 2008 and 2007, ~~and 2006,~~ respectively. The Company received approximately ~~$3.9~~$1.0 million and ~~$4.3~~$2.7 million in distributions from such joint ventures for the ~~nine months~~quarters ended ~~September 30,~~March 31, 2008 and 2007, ~~and 2006,~~ respectively. Approximately ~~$3.8~~$1.0 million and ~~$2.7~~$2.6 million of such distributions were classified as a return on capital and were included in operating activities on the Consolidated Statements of Cash Flows for the ~~nine months~~quarters ended ~~September 30,~~March 31, 2008 and 2007, ~~and 2006,~~ respectively. The remaining distributions were classified as return of capital and classified as investing activities on the Consolidated Statements of Cash Flows. Approximately ~~$2.2~~$0.8 million and ~~$1.3~~$2.0 million of the distributions received in the ~~nine months~~quarters ended ~~September 30,~~March 31, 2008 and 2007, ~~and 2006,~~ respectively, exceeded the Company’s basis in its joint venture and as such were recorded in income from unconsolidated joint ventures. Of these distributions, $0.6 million relates to the gain on the payoff of our share of seller financing in excess of our joint venture basis on one Lakeshore investment.

On February 15, 2008, the Company acquired an additional 25% interest in Voyager RV Resort for approximately $5.5 million, increasing the Company’s ownership interest to 50%.

Note ~~5 – Investment in Joint Ventures (continued)~~

~~Unconsolidated Real Estate Joint Venture Financial Information~~6 — Inventory

The following ~~tables present combined summarized financial information~~table sets forth Inventory as of ~~the unconsolidated real estate joint ventures~~March 31, 2008 and December 31, 2007 (amounts in thousands).:

Balance Sheets
As of
September 30, December 31,
2007 2006
Assets

Real estate, net $ 126,185 $ 101,180
Other assets 10,523 9,063

Total assets
$ 136,708 $ 110,243

Liabilities & Equity

Mortgage debt & other loans $ 112,929 $ 90,724
Other liabilities 12,554 10,108
Partners’ equity 11,225 9,411

Total liabilities and equity
$ 136,708 $ 110,243


	March 31,			December 31,
	2008			2007
New homes₍₁₎	$	49,500		$	51,083
Used homes₍₂₎		11,751			10,912
Other		2,542			2,361

Total inventory₍₃₎		63,793			64,356
Inventory reserve		(1,144	)		(830	)

Inventory, net of reserves	$	62,649		$	63,526

Statements of Operations
Quarters Ended Nine Months Ended
September 30, September 30,
2007 2006 2007 2006
Rentals $ 7,350 $ 7,805 $ 17,196 $ 18,515
Other Income 915 1,439 3,235 4,760

Total Revenues
8,265 9,244 20,431 23,275

Operating Expenses 3,836 4,007 10,376 11,838
Interest 1,771 1,436 4,743 5,022
Other Expenses (Income) 437 682 (7,864 ) (3,173 )
Depreciation & Amortization 1,180 1,622 3,545 5,786

Total Expenses
7,224 7,747 10,800 19,473

Net Income
$ 1,041 $ 1,497 $ 9,631 $ 3,802

₍₁₎ Includes 849 and 860 new units as of March 31, 2008 and December 31, 2007, respectively.
₍₂₎ Includes 1,042 and 978 used units as of March 31, 2008 and December 31, 2007, respectively.
₍₃₎ Includes $0.3 million in discontinued operations as of March 31, 2008 and December 31, 2007.

Included in the new and used inventory are approximately $28.7 million and $22.9 million of homes that are being rented or are available for rental, generally on an annual basis, as of March 31, 2008 and December 31, 2007, respectively.

Resale revenues are stated net of commissions paid to employees of $0.2 million and $0.3 million for quarters ended March 31, 2008 and 2007, respectively.

Note 67 – Notes Receivable

As of ~~September 30, 2007~~March 31, 2008 and December 31, ~~2006,~~2007, the Company had approximately ~~$11.3 million and $22.0~~$11.0 million in notes ~~receivable, respectively.~~receivable. As of ~~September 30,~~March 31, 2008 and December 31, 2007, the Company ~~has~~had approximately ~~$11.0~~$10.7 and $10.6 million, respectively, in Chattel Loans receivable, which yield interest at a per annum average rate of approximately 9.1%, have a weighted average term remaining of approximately 9nine years, require monthly principal and interest payments and are collateralized by homes at certain of the Properties. These notes are recorded net of allowances of ~~$181,000~~approximately $105,000 and ~~$110,000~~$160,000 as of ~~September 30, 2007~~March 31, 2008 and December 31, ~~2006,~~2007, respectively. During the ~~nine months~~quarter ended ~~September 30, 2007,~~March 31, 2008, approximately ~~$1.2~~$0.5 million was repaid and an additional ~~$2.9~~$1.0 million was loaned to homeowners.

As of ~~September 30, 2007~~March 31, 2008 and December 31, ~~2006,~~2007, the Company had approximately $0.4 million in notes which bear interest at a per annum rate of prime plus 0.5% and mature on December 31, 2011. The notes are collateralized with a combination of common OP Units and partnership interests in certain joint ventures.

As of December 31, 2006, we had a note receivable from Privileged Access of approximately $12.3 million. During the quarter ended March 31, 2007, we received a principal repayment of $7.3 million and during the quarter ending September 30, 2007, we received the remaining principal repayment of $5.0 million.

Note 78 – Long-Term Borrowings

In connection with the acquisition of Mesa Verde, during the first quarter of 2007, the Company assumed $3.5 million in mortgage debt bearing interest at 4.94% per annum and maturing in May 2008. In connection with the acquisition of Winter Garden, during the second quarter of 2007, the Company assumed $4.0 million in mortgage debt bearing interest at 4.3% per annum and maturing in September 2008. In addition, the Company repaid approximately $1.9 million in mortgage debt financing in connection with the sale of Lazy Lakes. Refer to Note 4 — Investment in Real Estate for acquisition and disposition activity.

~~During the quarter ended September 30, 2007, the company repaid the outstanding mortgage indebtedness on Ft. Myers Beach of approximately $2.9 million.~~

As of ~~September 30, 2007~~March 31, 2008 and December 31, ~~2006,~~2007, the Company had outstanding mortgage indebtedness on Properties held for long-term investment of approximately ~~$1,559~~$1,537 million and $1,542 million, respectively, and approximately ~~$15.0 million and $17.0~~$14 million of mortgage indebtedness, on Properties held for sale as of ~~September 30, 2007~~March 31, 2008 and December 31, ~~2006, respectively.~~2007. The weighted average interest rate, including amortization expense, on long-term borrowings for the ~~nine months~~quarter ending ~~September 30, 2007~~March 31, 2008 and the year ending December 31, ~~2006,~~2007, was approximately 6.1% per annum. The debt bears interest at rates of 4.3% to 10.0% per annum and matures on various dates ranging from ~~2007~~2008 to 2016. Included in our debt balance are three capital leases with an imputed interest rate of 13.1% per annum. The debt encumbered a total of 164 of the Company’s Properties as of ~~September 30, 2007~~March 31, 2008 and December 31, ~~2006,~~2007, and the carrying value of such Properties was approximately ~~$1,772~~$1,787 million and ~~$1,746~~$1,784 million, respectively, as of such dates.

In September 2007, we completed an amendment of our existing unsecured Lines of Credit (“LOC”) to expand our borrowing capacity from $275 million to $420 million. Prior to the amendment, the Company had a $225 million LOC and a $50 million LOC. The amendment increased the $225 million LOC to $400 million and decreased the $50 million LOC to $20 million. The lines of credit continue to accrue interest at LIBOR plus a maximum of 1.20% per annum, have a 0.15% facility fee, mature on June 30, 2010, and have a one-year extension option. Our current group of banks have committed up to $370 million on our $420 million borrowing capacity. The Company incurred commitment and arrangement fees of approximately $0.3 million to increase its borrowing capacity.

Note 89 – Stock-Based Compensation

The Company accounts for its stock-based compensation in accordance with Statement of Financial Accounting Standards No. 123(R), “Share Based Payment” (“SFAS 123(R)”), which was adopted on July 1, 2005.

Stock-based compensation expense was approximately ~~$3.2~~$1.6 million and ~~$2.3~~$1.0 million for the ~~nine months~~quarters ended ~~September 30,~~March 31, 2008 and 2007, ~~and 2006,~~ respectively.

Pursuant to the Stock Option Plan as discussed in Note 1213 to the ~~2006~~2007 Form 10-K, certain officers, directors, employees and consultants have been offered the opportunity to acquire shares of common stock of the Company through stock options (“Options”). During the ~~nine months~~quarter ended ~~September 30, 2007,~~March 31, 2008, Options for ~~138,888~~121,167 shares of common stock were exercised for gross proceeds of approximately ~~$2.5~~$2.0 million.

On January 4, 2008, the Company awarded restricted stock grants for 30,000 shares of common stock at a fair market value of approximately $1.3 million to Mr. Joe McAdams. One-third of the restricted common stock vested immediately upon issuance, with one-third will vest on each of December 31, ~~2007,~~2008 and December 31, 2009.

On January 31, 2008, the Company awarded restricted stock grants for 8,000 shares of common stock at a fair market value of approximately ~~$442,000,~~$349,000, and awarded Options to purchase 115,000 shares of common stock with an exercise price of ~~$55.23~~$43.67 per share to certain members of the Board of Directors for services rendered in ~~2006.~~2007. One-third of the Options to purchase common stock and the shares of restricted common stock covered by these awards vests on each of December 31, ~~2007,~~2008, December 31, ~~2008,~~2009, and December 31, ~~2009.~~2010.

On May 15, 2007, the Company awarded restricted stock grants for 10,000 shares of common stock at a fair market value of approximately $542,000, and awarded Options to purchase 30,000 shares of common stock with an exercise price of $54.20 per share to members of the Board of Directors for services rendered in 2007. One-third of the Options to purchase common stock vest on the date six months after the grant date, one-third vest on the first anniversary of the grant date and one-third vest on the second anniversary of the grant date.

Note 910 – Long-Term Cash Incentive Plan

On May 15, 2007, the Company’s Board of Directors approved a Long-Term Cash Incentive Plan (the “Plan”) to provide a long-term cash bonus opportunity to certain members of the Company’s management and executive officers. The total cumulative payment for all participant’s (the Eligible Payment) is based upon certain performance conditions being met. Such performance conditions include the Company’s Compound Annual Funds From Operations Per Share Growth Rate over the three-year period ending December 31, 2009, which is further adjusted upward or downward based on the Company’s Total Return compared to a selected peer group. The Company accounts for the Plan in accordance with SFAS 123(R). As of ~~September 30, 2007,~~March 31, 2008, the Company had accrued compensation expense of approximately ~~$311,000~~$1.0 million related to the ~~Plan.~~Plan, including approximately $0.3 million in the quarter ended March 31, 2008.

Note 11 — Transactions with Related Parties

Privileged Access

Mr. McAdams, the Company’s President effective January 1, 2008, owns 100 percent of Privileged Access. The Company has entered into an employment agreement effective as of January 1, 2008 (the “Agreement”) with Mr. McAdams which provides for an initial term of three years, but such Agreement can be terminated at any time. The Agreement provides for a minimum annual base salary of $300,000, with the option to receive an annual bonus in an amount up to three times his base salary. Mr. McAdams is also subject to a non-compete clause and to mitigate potential conflicts of interest shall have no authority, on behalf of the Company and its affiliates, to enter into any agreement with any entity controlling, controlled by or affiliated with Privileged Access. Prior to forming Privileged Access, Mr. McAdams was a member of our Board of Directors from January 2004 to October 2005. Simultaneous with his appointment as president of Equity Lifestyle Properties, Inc., Mr. McAdams resigned as Privileged Access’s Chairman, President and CEO. However, he will remain on the board of PATT Holding Company, LLC (“PATT”), Thousand Trails’ parent entity and a subsidiary of Privileged Access and retains 100 percent ownership of Privileged Access.

Mr. Heneghan, the Company’s CEO, is a member of the board of PATT, pursuant to the Company’s rights under its resort Property leases with Privileged Access to represent the Company’s interests. Mr. Heneghan does not receive compensation in his capacity as a member of such board.

Note 11 — Transactions with Related Parties (continued)

Privileged Access has substantial business relationships with the Company, including the following:

	•		As of March 31, 2008, we are leasing approximately 24,300 sites at 82 resort Properties (which includes 60 Properties operated by a subsidiary of Privileged Access known as the “TT Portfolio”) to Privileged Access or its subsidiaries. For the quarters ended March 31, 2008, and 2007, we recognized approximately $6.4 million, and $4.9 million, respectively, in rent from these leasing arrangements. The lease income is included in Income from other investments, net in the Company’s Consolidated Statement of Operations. As of March 31, 2008 and December 31, 2007, no payments and approximately $0.1 million, respectively, were outstanding. During the quarters ended March 31, 2008 and 2007, the Company made no reimbursements to Privileged Access for capital improvements.

			Effective January 1, 2008, the leases for these Properties provide for the following significant terms: a) annual fixed rent of approximately $25.5 million, b) annual rent increases at the higher of CPI or a renegotiated amount based upon the fair market value of the Properties, c) expiration date of January 15, 2020, and d) two 5-year extension terms at the option of Privileged Access. The January 1, 2008 lease for the TT Portfolio also included provisions where the Company paid Privileged Access $1 million for entering into the amended lease. The $1 million payment will be amortized on a pro-rata basis over the term of the lease as an offset to the annual lease payments. Additionally, the Company also agreed to reimburse Privileged Access up to $5 million for the cost of any improvements made to the TT Portfolio. The Company shall reimburse Privileged Access only if the improvement has been pre-approved, is a depreciable fixed asset and supporting documentation is provided. The assets purchased with the capital improvement fund will be the assets of the Company and will be amortized in accordance with the Company’s depreciation policies.

			The Company has subordinated its lease payment for the TT Portfolio to a bank that has loaned Privileged Access $5 million as of March 31, 2008. Privileged Access is obligated to pay back $2.5 million of the loan in 2009 and the final $2.5 million in 2010. The Company believes that the possibility that Privileged Access would not make its lease payment on the TT Portfolio as a result of the subordination is remote.

	•		Since June 12, 2006, Privileged Access has leased 130 cottage sites at Tropical Palms, a resort Property located near Orlando, Florida. For the quarters ended March 31, 2008 and 2007, we earned approximately $0.3 million and $0.4 million, respectively, in rent from this leasing arrangement. The lease income is included in the Resort base rental income in the Company’s Consolidated Statement of Operations. As of both March 31, 2008 and December 31, 2007, approximately $0.4 million in lease payments were outstanding. The Tropical Palms lease currently provides for the following significant terms: a) annual fixed rent of approximately $1.4 million, paid quarterly, b) percentage rent of 50% of the tenants gross revenues in excess of the fixed rent, and c) expiration date of June 30, 2008.

	•		The Company leased 40 to 160 sites at three resort Properties in Florida, to a subsidiary of Privileged Access from October 1, 2007 until September 30, 2010. The sites will vary during each month of the lease term due to the seasonality of the resort business in Florida. For the quarter ended March 31, 2008, we recognized approximately $0.1 million in rent from this leasing arrangement. The lease income is included in the Resort base rental income in the Company’s Consolidated Statement of Operations. As of March 31, 2008 and December 31, 2007, no amounts are outstanding under this lease. The annual fixed rent is approximately $0.2 million.

	•		The Company leased 40 to 160 sites at Lake Magic, a resort Property in Clermont, Florida, to a subsidiary of Privileged Access from December 15, 2006 until September 30, 2007. The sites varied during each month of the lease term due to the seasonality of the resort business in Florida. For the quarter ended March 31, 2007, we recognized approximately $0.1 million in rent from this leasing arrangement. The lease income is included in the Resort base rental income in the Company’s Consolidated Statement of Operations. As of March 31, 2008, no amounts are outstanding under this expired lease.

Note 11 — Transactions with Related Parties (continued)

	•		The Company has an option to purchase the subsidiaries of Privileged Access, including TT, beginning on April 14, 2009, at the then fair market value, subject to the satisfaction of a number of significant contingencies (“ELS Option”). The ELS Option terminates on January 15, 2020. The Company has consented to a fixed price option where the Chairman of PATT can acquire the subsidiaries of Privileged Access anytime before December 31, 2011. If the Company exercised the ELS Option prior to December 31, 2011, the fixed price option would terminate.

	•		Privileged Access and the Company have agreed to certain arrangements in which we may utilize each other’s services. During the quarter ended March 31, 2008, the Company expensed approximately $48,000 for the use of a Privileged Access employee who is managing the Company’s call center and $24,000 and $0 were accrued for Privileged Access as of March 31, 2008 or December 31, 2007, respectively for the call center services. For the remainder of 2008, the Company expects to incur approximately $1.0 million in costs for Privileged Access to assist the Company with functions such as: call center management, information technology, legal, sales and marketing. The Company expects to receive approximately $0.1 million from Privileged Access for Privileged Access use of certain Company information technology resources during the remainder of 2008. The Company and Privileged Access expect to add additional shared employee arrangements and will engage a third party to evaluate the fair market value of such employee services.

In addition to the arrangements described above, the Company has the following arrangements with Privileged Access. In each arrangement, the amount of income or expense, as applicable, recognized by the Company for the quarter ended March 31, 2008 is less than $0.1 million and there were no amounts due under these arrangements as of March 31, 2008 or December 31, 2007. Each arrangement is expected to generate less than $0.1 million of revenue, or expense as applicable, for the year ending December 31, 2008.

	•		Since November 1, 2006, the Company has leased 41 to 44 sites at 22 resort Properties to Privileged Access (the “Park Pass Lease”). The Park Pass Lease expires on October 31, 2008.

	•		The Company and Privileged Access have entered into a Site Exchange Agreement for a one-year period beginning September 1, 2007 and ending August 31, 2008. Under the Site Exchange Agreement, the Company is allowing Privileged Access to use 20 sites at an Arizona resort Property known as Countryside. In return, Privileged Access is allowing the Company to use 20 sites at an Arizona resort Property known as Verde Valley Resort (a property in the TT Portfolio).

	•		On September 15, 2006, the Company and Privileged Access entered into a Park Model Sales Agreement related to a Texas resort Property in the TT Portfolio known as Lake Conroe. Under the Park Model Sales Agreement, Privileged Access was allowed to sell up to 26 park models at Lake Conroe. Privileged Access is obligated to pay the Company 90% of the site rent collected from the park model buyer. All 26 homes have been sold as of December 31, 2007.

	•		The Company advertises in Trailblazer, a magazine that is published by a subsidiary of Privileged Access. Trailblazer is an award-winning recreational lifestyle magazine for active campers, which is read by more than 65,000 paid subscribers.

	•		On April 1, 2008, the Company entered into a six-month lease for a corporate apartment located in Chicago, Illinois for use by Mr. McAdams and other employees of the Company and Privileged Access. The Company pays monthly rent payments, plus utilities and housekeeping expenses. Mr. McAdams and Privileged Access reimburse the Company for their use of the apartment.

Note 11 — Transactions with Related Parties (continued)

The Company is not required, explicitly or implicitly, to protect Mr. McAdams from absorbing losses incurred by Privileged Access and observes that it could be required to consolidate Privileged Access in the event it were to provide subordinated financial support to Mr. McAdams or Privileged Access—either directly or indirectly—in the future.

Corporate headquarters

The Company leases office space from Two North Riverside Plaza Joint Venture Limited Partnership, an entity affiliated with Mr. Zell, the Company’s Chairman of the Board. Fees paid to this entity amounted to approximately $163,000 and $196,000 for the quarters ended March 31, 2008 and 2007, respectively. The Company had no amounts due to this entity as of March 31, 2008 and December 31, 2007, respectively.

Note 1012 – Commitments and Contingencies

~~Guarantees~~

In September 2007, the Company guaranteed $2.5 million on a $10.0 million loan that Privileged Access obtained from a bank. The guarantee expires in January 2008. Under this guarantee, the Company is obligated to pay $2.5 million of the loan should Privileged Access be unable to make payments. The Company has identified this guarantee in accordance with FASB Interpretation 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others — an interpretation of FASB Statements No. 5, 57 and 107 and rescission of FASB Interpretation No. 34” (“FIN 45”). FIN 45 elaborates on the existing disclosure requirements for most guarantees and clarifies that at the time an entity issues a guarantee, the entity must recognize an initial liability for the fair value of the obligations it assumes under the guarantee. The Company evaluates losses for guarantees under Statement of Financial Accounting Standards No. 5, “Accounting for Contingencies” (“SFAS 5”). The Company considers such factors as the degree of probability that the Company would be required to satisfy the liability associated with the guarantee and the ability to make a reasonable estimate of the amount of loss. To date, the Company has not encountered material costs as a result of this obligation and has not accrued any liability related to the obligation in its financial statements.

~~Note 10 – Commitments and Contingencies (continued)~~

California Rent Control Litigation

As part of the Company’s effort to realize the value of its Properties subject to rent control, the Company has initiated lawsuits against several municipalities in California. The Company’s goal is to achieve a level of regulatory fairness in California’s rent control jurisdictions, and in particular those jurisdictions that prohibit increasing rents to market upon turnover. Regulations in California allow tenants to sell their homes for a premium representing the value of the future discounted rent-controlled rents. In the Company’s view, such regulation results in a transfer of the value of the Company’s stockholders’ land, which would otherwise be reflected in market rents, to tenants upon the sales of their homes in the form of an inflated purchase price that cannot be attributed to the value of the home being sold. As a result, in the Company’s view, the Company loses the value of its asset and the selling tenant leaves the Property with a windfall premium. The Company has discovered through the litigation process that certain municipalities considered condemning the Company’s Properties at values well below the value of the underlying land. In the Company’s view, a failure to articulate market rents for sites governed by restrictive rent control would put the Company at risk for condemnation or eminent domain proceedings based on artificially reduced rents. Such a physical taking, should it occur, could represent substantial lost value to stockholders. The Company is cognizant of the need for affordable housing in the jurisdictions, but asserts that restrictive rent regulation does not promote this purpose because the benefits of such regulation are fully capitalized into the prices of the homes sold. The Company estimates that the annual rent subsidy to tenants in these jurisdictions may be in excess of $15 million. In a more well balanced regulatory environment, the Company would receive market rents that would eliminate the subsidy and homes would trade at or near their intrinsic value.

In connection with such efforts, the Company announced it has entered into a settlement agreement with the City of Santa Cruz, California and that, pursuant to the settlement agreement, the City amended its rent control ordinance to exempt the Company’s Property from rent control as long as the Company offers a long term lease which gives the Company the ability to increase rents to market upon turnover and bases annual rent increases on the CPI. The settlement agreement benefits the Company’s stockholders by allowing them to receive the value of their investment in this Property through vacancy decontrol while preserving annual CPI based rent increases in this age-restricted Property.

The Company has filed two lawsuits in federal court against the City of San Rafael, challenging its rent control ordinance on constitutional grounds. The Company believes that one of those lawsuits was settled by the City agreeing to amend the ordinance to permit adjustments to market rent upon turnover. The City subsequently rejected the settlement agreement. The Court initially found the settlement agreement was binding on the City, but then reconsidered and determined to submit the claim of breach of the settlement agreement to a jury. In October 2002, the first case against the City went to trial, based on both breach of the settlement agreement and the constitutional claims. A jury found no breach of the settlement agreement; the Company then filed motions asking the Court to rule in its favor on that claim, notwithstanding the jury verdict. The Court postponed decision on those motions and on the constitutional claims, pending a ruling on ~~some~~certain property rights issues by the United States Supreme Court.

1921

Note ~~10 —~~12 – Commitments and Contingencies (continued)

The Company also had pending a claim seeking a declaration that the Company could close the Property and convert it to another use which claim was not tried in 2002. The United States Supreme Court issued the property rights rulings in 2005 and subsequently on January 27, 2006, the Court hearing the San Rafael cases issued a ruling that granted the Company’s motion for leave to amend to assert alternative takings theories in light of the United States Supreme Court’s decisions. The Court’s ruling also denied the Company’s post trial motions related to the settlement agreement and dismissed the park closure claim without prejudice to the Company’s ability to reassert such claim in the future. As a result, the Company ~~has~~ filed a new complaint challenging the City’s ordinance as violating the takings clause and substantive due process. The City of San Rafael filed a motion to dismiss the amended complaint. On December 5, 2006, the Court denied portions of the City’s motion to dismiss that had sought to eliminate certain of the Company’s taking claims and substantive due process claims. The Company’s claims against the City were tried in a bench trial during April 2007. ~~Post-trial briefing occurred during May 2007.~~ On July 26, 2007, the United States District Court for the Northern District of California issued Preliminary Findings of Facts and Legal Standards, Preliminary Conclusions of Law and Request for Further Briefing (“Preliminary Findings”) in this matter. The Company ~~has~~ filed the Preliminary Findings on Form 8-K on August 2, 2007. In August 2007, the Company and the City filed the further briefs requested by the Court. On January 29, 2008, the Court issued its Findings of Facts, Conclusions of Law and Order Thereon (the “Order”). The Company filed the Order on Form 8-K on January 31, 2008. On March 14, 2008, the Company filed a petition for attorneys’ fees incurred in the amount of approximately $6,800,000 plus costs of approximately $1,274,000. The City also filed a petition for attorneys’ fees incurred in the amount of approximately $763,000 plus costs of approximately $58,000 in connection with the jury verdict that found no breach of the settlement agreement (as described above). While the City alleges it is the prevailing party on the settlement agreement issue, the Company asserts that the outcome of the entirety of the case finding the ordinance unconstitutional means that the Company is the prevailing party in the case. The parties have submitted briefs with respect to the petitions for attorneys’ fees and costs, which remain pending before the court and there can be no assurances as to the outcome of these petitions.

The Company’s efforts to achieve a balanced regulatory environment incentivize tenant groups to file lawsuits against the Company seeking large damage awards. The homeowners association at Contempo Marin (“CMHOA”), a 396 site Property in San Rafael, California, sued the Company in December 2000 over a prior settlement agreement on a capital expenditure pass-through after the Company sued the City of San Rafael in October 2000 alleging its rent control ordinance is unconstitutional. In the Contempo Marin case, the CMHOA prevailed on a motion for summary judgment on an issue that permits the Company to collect only $3.72 out of a monthly pass-through amount of $7.50 that the Company believed had been agreed to by the CMHOA in a settlement agreement. The CMHOA continued to seek damages from the Company in this matter. The Company reached a settlement with the CMHOA in this matter which allows the Company to recover $3.72 of the requested monthly pass-through and does not provide for the payment of any damages to the CMHOA. Both the CMHOA and the Company brought motions to recover their respective attorneys’ fees in the matter, which motions were heard by the Court in January 2007. On January 12, 2007, the Court granted CMHOA’s motion for attorneys’ fees in the amount of $347,000 and denied the Company’s motion for attorneys’ fees. These fees have been fully accrued by the Company as of December 31, 2006. The Company has appealed both decisions. The Company believes that such lawsuits will be a consequence of the Company’s efforts to change rent control since tenant groups actively desire to preserve the premium value of their homes in addition to the discounted rents provided by rent control. The Company has determined that its efforts to rebalance the regulatory environment despite the risk of litigation from tenant groups are necessary not only because of the $15 million annual subsidy to tenants, but also because of the condemnation risk.

~~Similarly, in~~In June 2003, the Company won a judgment against the City of Santee in California Superior Court (case no. 777094). The effect of the judgment was to invalidate, on state law grounds, two (2) rent control ordinances the City of Santee had enforced against the Company and other property owners. However, the Court allowed the City to continue to enforce a rent control ordinance that predated the two invalid ordinances (the “prior ordinance”). As a result of the judgment the Company was entitled to collect a one-time rent increase based upon the difference in annual adjustments between the invalid ordinance(s) and the prior ~~ordinances~~ordinance and to adjust its base rents to reflect what the Company could have charged had the prior ordinance been continually in effect. The City of Santee appealed the judgment. The ~~court~~Court of ~~appeal~~Appeal and California Supreme Court refused to stay enforcement of these rent adjustments pending appeal. After the City was unable to obtain a stay, the City and the tenant association each sued the Company

~~Note 10 — Commitments and Contingencies (continued)~~

unconstitutional provisions. However, the Court ruled the City had the authority to cure the issues with the first ordinance retroactively and that the City could sever the unconstitutional provisions in the second ordinance. On remand, the trial court iswas directed to decide the issue of damages to the Company from these ordinances, which the Company believes is consistent not only with the Company receiving the economic benefit of invalidating one of the ordinances, but also consistent with the Company’s position that it is entitled to market rent and not merely a higher amount of regulated rent. The remand action was tried to the court in the third quarter of ~~2007~~2007. On January 25, 2008, the trial court issued a preliminary ruling determining that the Company had not incurred any damages from these ordinances and ~~post-trial briefs have been filed. The court has asked for closing arguments to be made in November 2007.~~actions primarily on the grounds that the ordinances afforded the Company a fair rate of return. The Company ~~intends to continue to vigorously pursue its damages in~~sought clarification of this ruling. On April 9, 2008, the court issued a final statement of decision that included a clarification stating that the constitutional issues were not resolved on the merits and that the court had not determined that the ordinances afforded the Company a fair rate of return outside the remand ~~action and~~period. The Company plans to ~~vigorously defend the two other lawsuits.~~appeal.

In addition, the Company has sued the City of Santee in federal court alleging all three of the ordinances are unconstitutional under the Fifth and Fourteenth Amendments to the United States Constitution. Thus, it is the Company’s position that the ordinances are subject to invalidation as a matter of law in the federal court action. Separately, the Federal District Court granted the City’s Motion for Summary Judgment in the Company’s federal court lawsuit. This decision was based not on the merits, but on procedural grounds, including that the Company’s claims were moot given its success in the state court case. The Company appealed the decision, and on May 3, 2007 the United States Court of Appeals for the Ninth Circuit affirmed the District Court’s decision on procedural grounds. The Company intends to continue to pursue an adjudication of its rights on the merits in Federal Court through claims that are not subject to such procedural defenses.

In October 2004, the United States Supreme Court granted certiorari inState of Hawaii vs. Chevron USA, Inc., a Ninth Circuit Court of ~~Appeal~~Appeals case that upheld the standard that a regulation must substantially advance a legitimate state purpose in order to be constitutionally viable under the Fifth Amendment. On May 24, 2005 the United States Supreme Court reversed the Ninth Circuit Court of ~~Appeal~~Appeals in an opinion that clarified the standard of review for regulatory takings brought under the Fifth Amendment. The Supreme Court held that the heightened scrutiny applied by the Ninth Circuit is not the applicable standard in a regulatory takings analysis, but is an appropriate factor for determining if a due process violation has occurred. The Court further clarified that regulatory takings would be determined in significant part by an analysis of the economic impact of the regulation. The Company believes that the severity of the economic impact on its Properties caused by rent control will enable it to continue to challenge the rent regulations under the Fifth Amendment and the due process clause.

As a result of the Company’s efforts to achieve a level of regulatory fairness in California, a commercial lending company, 21^st Mortgage Corporation, a Delaware corporation, sued MHC Financing Limited Partnership. Such lawsuit asserts that certain rent increases implemented by the partnership pursuant to the rights afforded to the property owners under the City of San Jose’s rent control ordinance were invalid or unlawful. 21^st Mortgage has asserted that it should benefit from the vacancy control provisions of the City’s ordinance as if 21^st Mortgage were a “homeowner” and contrary to the ordinance’s provision that rents may be increased without restriction upon termination of the homeowners’ tenancy. In each of the disputed cases, the Company believes it had terminated the tenancy of the homeowner (21^st Mortgage’s borrower) through the legal process. The Court, in granting 21^st Mortgage’s motion for summary judgment, has indicated that 21^st Mortgage may be a “homeowner” within the meaning of the ordinance. The Company does not believe that 21^st Mortgage can show that it has ever applied for tenancy, entered into a rental agreement or been accepted as a homeowner in the communities. ~~Moreover, California Civil Code Section 798.21 specifically exempts non-principal residents from the benefits of rent control. Trial~~A bench trial in this matter ~~is currently scheduled for November 2007. The Company intends to continue vigorously defending this matter.~~

~~Dispute~~concluded in January 2008 with ~~Las Gallinas Valley Sanitary District~~

~~In November 2004,~~the trial court determining that the Company ~~received a Compliance Order (the “Compliance Order”) from~~had validly exercised its rights under the ~~Las Gallinas Valley Sanitary District (the “District”), relating~~rent control ordinance, that the Company had not violated the ordinance and that 21^st Mortgage was not entitled to the ~~Company’s Contempo Marin Property~~benefit of rent control protection in ~~San Rafael, California. The Compliance Order directed~~the circumstances presented. In April 2008, the Company ~~to submit and implement~~filed a ~~plan to bring the Property’s domestic wastewater discharges into compliance with the applicable District ordinance (the “Ordinance”), and to ensure continued compliance with the Ordinance~~petition for attorneys’ fees incurred in ~~the future.~~

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Note ~~10 —~~12 – Commitments and Contingencies (continued)

Without admitting any violation of the Ordinance, the Company promptly engaged a consultant to review the Property’s sewage collection system and prepare a compliance plan to be submitted to the District. The District approved the compliance plan in January 2005, and the Company promptly took all necessary actions to implement same.

Thereafter, the Company received a letter dated June 2, 2005 from the District’s attorney (the “June 2 Letter”), acknowledging that the Company has “taken measures to bring the Property’s private sanitary system into compliance” with the Ordinance, but claiming that prior discharges from the Property had damaged the District’s sewers and pump stations in the amount of approximately ~~$368,000. The letter threatened legal action if necessary to recover~~$812,000 plus costs of approximately $79,000, which remains pending before the ~~cost of repairing such damage. By letter dated June 23, 2005, counsel for the Company denied the District’s claims set forth in the June 2 Letter.~~

~~On July 1, 2005, the District filed a Complaint for Enforcement of Sanitation Ordinance, Damages, Penalties~~Court and Injunctive Relief in the California Superior Court for Marin County, and on August 17, 2005, the District filed its First Amended Complaint (the “Complaint”). On September 26, 2005, the Company filed its Answerthere can be no assurances as to the ~~Complaint, denying each and every allegation~~outcome of ~~the Complaint and further denying that the District is entitled to any of the relief requested therein.~~

The District subsequently issued a Notice of Violation dated December 12, 2005 (the “NOV”), alleging additional violations of the Ordinance. By letter dated December 23, 2005, the Company denied the allegations in the NOV.

~~The Company settled~~ this ~~matter in May 2007 by agreeing to make certain improvements to the operation of the Property’s sanitary collection system and without the payment of any monetary damages to the District.~~petition.

Countryside at Vero Beach

The Company previously received letters dated June 17, 2002 and August 26, 2002 from Indian River County (“County”), claiming that the Company owed sewer impact fees in the amount of approximately $518,000 with respect to the Property known as Countryside at Vero Beach, located in Vero Beach, Florida, purportedly under the terms of an agreement between the County and a prior owner of the Property. In response, the Company advised the County that these fees are no longer due and owing as a result of a 1996 settlement agreement between the County and the prior owner of the Property, providing for the payment of $150,000 to the County to discharge any further obligation for the payment of impact or connection fees for sewer service at the Property. The Company paid this settlement amount (with interest) to the County in connection with the Company’s acquisition of the Property. In February 2006, the Company was served with a complaint filed by the County in Indian River County Circuit Court, requesting a judgment declaring a lien against the Property for allegedly unpaid impact fees, and foreclosing said lien. On March 30, 2006, the Company served its answer and affirmative defenses, and the case is now in the discovery stage. In the fourth quarter of 2007 the Company settled this matter by agreeing to pay impact fees in the amount of approximately $360,000 to Indian River County. The $360,000 will be capitalized in land improvements on the Company’s Consolidated Balance Sheet and depreciated over the useful life of the asset. All legal fees incurred to settle this matter will be expensed.

On January 12, 2006, the Company was served with a complaint filed in Indian River County Circuit Court on behalf of a purported class of homeowners at Countryside at Vero Beach. The complaint includes counts for alleged violations of the Florida Mobile Home Act and the Florida Deceptive and Unfair Trade Practices Act, and claims that the Company required homeowners to pay water and sewer impact fees, either to the Company or to the County, “as a condition of initial or continued occupancy in the Park”, without properly disclosing the fees in advance and notwithstanding the Company’s position that all such fees were fully paid in connection with the settlement agreement described above. On February 8, 2006, the Company served its motion to dismiss the complaint. In May 2007, the Court granted the Company’s motion to dismiss, but also allowed the plaintiff to amend ~~their~~the complaint. The plaintiff filed an amended complaint, which the Company has also moved to dismiss. Before any ruling on the Company’s motion to dismiss the amended complaint, the plaintiff asked for and received leave to file a second amended complaint, which the plaintiff filed on April 11, 2008. The Company will vigorously defend the lawsuit.

~~Note 10 — Commitments and Contingencies (continued)~~

Colony Park

On December 1, 2006, a group of tenants at the Company’s Colony Park Property in Ceres, California filed a complaint in the California Superior Court for Stanislaus County alleging that the Company has failed to properly maintain the Property and has improperly reduced the services provided to the tenants, among other allegations. On March 2, 2007, the Company filed a demurrer to the complaint, along with a motion to strike portions of the complaint (“motion to strike”) and a motion to compel arbitration and stay action (“motion to compel”). After a hearing on March 28, 2007, the Court issued a ruling on April 5, 2007, which overruled the demurrer, took the motion to compel under submission, and granted the motion to strike in part and denied it in part. The Court subsequently issued a ruling on April 6, 2007, denying the motion to compel. The Company has filed an interlocutory appeal, which is pending, of the denial of the motion to compel. On April 11, 2007, the plaintiff tenant group filed their first amended complaint in the case. On September 19, 2007, the Company filed an answer denying all material allegations of the first amended complaint and filed a counterclaim for declaratory relief and damages. Discovery has commenced. The Court has set a trial date for October 21, 2008. The Company believes that the allegations in the first amended complaint are without merit, and intends to vigorously defend the lawsuit.

California’s Department of Housing and Community Development (“HCD”) issued a Notice of Violation dated August 21, 2006 regarding the sewer system at Colony Park. The notice ordered the Company to replace the Property’s sewer system or show justification from a third party explaining why the sewer system does not need to be replaced. The Company has provided such third party report to HCD and believes that the sewer system does not need to be replaced. Based upon information provided by the Company to HCD to date, HCD has indicated that it agrees that the entire system does not need to be replaced.

Hurricane Claim Litigation

On June 22, 2007 the Company filed suit, in the Circuit Court of Cook County, Illinois (Case No. 07CH16548), against its insurance carriers, Hartford Fire Insurance Company, Essex Insurance Company, Lexington Insurance Company, and Westchester Surplus Lines Insurance Company, regarding a coverage dispute arising from losses suffered by the Company as a result of hurricanes that occurred in Florida in 2004 and 2005. The Company also brought claims against Aon Risk Services, Inc. of Illinois, the Company’s insurance broker, regarding the procurement of appropriate insurance coverage for the Company. The Company is seeking declaratory relief establishing the coverage obligations of its carriers, as well as a judgment for breach of contract, breach of the covenant of good faith and fair dealing, unfair settlement practices and, as to Aon, for failure to provide ordinary care in the selling and procuring of insurance. The claims involved in this action exceed $11 million.

Note 12 – Commitments and Contingencies (continued)

In response to motions to dismiss, the trial court dismissed: (1) the requests for declaratory relief as being duplicative of the claims for breach of contract and (2) certain of the breach of contract claims as being not ripe until the limits of underlying insurance policies have been exhausted. On or about January 28, 2008, the Company filed its Second Amended Complaint. Aon has filed a motion to dismiss the Second Amended Complaint in its entirety as against Aon, and the insurers have moved to dismiss portions of the Second Amended Complaint as against them. A briefing schedule on those motions has been set. Written discovery proceedings have commenced.

Since filing the lawsuit, the Company has received additional payments from Essex Insurance Company and Lexington Insurance Company of approximately $2.2 million. In addition, in January 2008 the Company entered a settlement with Hartford Fire Insurance Company pursuant to which Hartford paid the Company the remaining disputed limits of Hartford’s insurance policy, in the amount of approximately $516,000.00, and the Company dismissed and released Hartford from additional claims for interest and bad faith claims handling.

Brennan Beach

The Company has learned that the Law Enforcement Division of the New York Department of Environmental Compliance (“DEC”) ~~is investigating~~has investigated certain allegations relating to the operation of the onsite wastewater treatment plant and the use of adjacent wetlands at Brennan Beach, which is located in Pulaski, New York. The Company attended meetings with the DEC in November 2007 and April 2008 at which certain alleged violations were discussed, and the Company has cooperated with the DEC investigation. No formal notices have been issued to the Company asserting specific violations, ~~and~~but the DEC has indicated that it believes the Company is ~~cooperating with~~responsible for certain alleged violations and has proposed that the ~~DEC investigation.~~

~~Note 10 — Commitments~~Company agree to a resolution involving formal acknowledgment of responsibility and ~~Contingencies (continued)~~the payment of penalties, which the Company is considering. While the outcome is still uncertain, the amount of any penalties is not expected to be material.

Appalachian RV

The Company has learned that the U.S. Environmental Protection Agency (“EPA”) ~~is investigating~~has undertaken an investigation of potential ~~soil~~lead contamination at Appalachian RV, which is located in Shartlesville, Pennsylvania, reportedly stemming from observations of remnants of old auto battery parts at the Property. ~~The~~In late November and early December 2007, the EPA ~~intends to conduct~~conducted an assessment by taking samples of surface soil, ~~sampling~~sediment, surface water, and well water at the Property. The Company is cooperating with the EPA.

In March 2008, the EPA ~~investigation.~~issued a report regarding the findings of the sampling (“EPA Report”). The EPA Report found no elevated concentrations of lead in either the sediment samples, surface water samples, or well water samples. However, out of the more than 800 soil samples the EPA took, which were collected from locations throughout the Property, the EPA Report identified elevated levels of lead in 61 samples.

Following issuance of the EPA Report, the EPA sent the Company a Notice of Potential Liability for a cleanup of the elevated lead levels at the Property, and a proposed administrative consent order seeking the Company’s agreement to conduct such a cleanup. On April 9, 2008,the Company submitted a response suggesting that the Company conduct additional soil testing, which the EPA has approved, to determine what type of cleanup might be appropriate.

The EPA also advised the Company that, because elevated arsenic levels were detected at six locations at the Property during the EPA’s testing for lead, at the suggestion of the Agency for Toxic Substances and Disease Registry (ATSDR), the EPA is further analyzing for potentially elevated arsenic levels the samples it previously collected.

As a result of these circumstances, the Company decided not to open the Property until these issues can be resolved. In addition, although the potential costs and most appropriate method of addressing the environmental issues at the Property are uncertain, based upon information to date, a liability of approximately $0.3 million for future estimated costs was accrued in the first quarter of 2008.

Note 12 – Commitments and Contingencies (continued)

Florida Utility Operations

The Company received notice from the Florida Department of Environmental Protection (“DEP”) that as a result of a compliance inspection it is alleging violations of Florida law relating to the operation of onsite water plants and ~~waste water~~wastewater treatment plants at seven properties in Florida. The alleged violations relate to record keeping and reporting requirements, physical and operating deficiencies and permit compliance. The Company ~~is investigating~~has investigated each of the alleged violations, including a review of a third party operator hired to oversee such operations. The Company met with the DEP in November 2007 to respond to the alleged violations and as a follow-up to such meeting ~~will provide~~provided a written response to the ~~DEP.~~DEP in December 2007. In light of the Company’s written response, in late January 2008 the DEP conducted a follow-up compliance inspection at each of the seven properties. In early March 2008, the DEP provided the Company comments in connection with the follow-up inspection, which made various recommendations and raised certain additional alleged violations similar in character to those alleged after the initial inspection. The Company has investigated and responded to the additional alleged violations. While the outcome of this investigation remains uncertain, the Company expects to resolve the issues raised by the DEP by entering into a consent decree in which the Company will agree to make certain improvements in its facilities and operations to resolve the issues and pay certain costs and penalties associated with the violations. While the outcome is still uncertain, the amount of the costs and penalties to be paid to the DEP is not expected to be material. The Company has also replaced its third party operator hired to oversee onsite water and wastewater operations at each of the seven properties. The Company is evaluating the costs of any improvements to its facilities, which would be capital expenditures depreciated over the estimated useful life of the improvement. During the course of this investigation, one permit for operation of a WWTP expired. The Company applied for renewal of the permit and expects the DEP to grant the application.

Other

The Company is involved in various other legal proceedings arising in the ordinary course of business. Such proceedings include, but are not limited to, notices, consent decrees, additional permit requirements and other similar enforcement actions by governmental agencies relating to the Company’s water ~~plants~~ and wastewater treatment ~~plants.~~plants and other waste treatment facilities. Additionally, in the ordinary course of business, the Company’s operations are subject to audit by various taxing authorities. Management believes that all proceedings herein described or referred to, taken together, are not expected to have a material adverse impact on the Company. In addition, to the extent any such proceedings or audits relate to newly acquired Properties, the Company considers any potential indemnification obligations of sellers in favor of the Company.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

The Company is a self-administered, self-managed, real estate investment trust ~~(REIT)~~(“REIT”) with headquarters in Chicago, Illinois. The Company is a fully integrated owner and operator of lifestyle-oriented properties (“Properties”). The Company leases individual developed areas (“sites”) with access to utilities for placement of factory built homes, cottages, cabins or recreational vehicles (“RVs”). The Company was formed to continue the property operations, business objectives and acquisition strategies of an entity that had owned and operated Properties since 1969. As of ~~September 30, 2007, the Company~~March 31, 2008, we owned or had an ownership interest in a portfolio of ~~312~~313 Properties located throughout the United States and Canada containing ~~112,925~~112,865 residential sites. These Properties are located in 2928 states and British Columbia (with the number of Properties in each state or province shown parenthetically): – Florida (87), California (48), Arizona (35), Texas (15), Pennsylvania (13), Washington ~~(13)~~(14), Colorado (10), Oregon (9), North Carolina (8), Virginia (8), Delaware (7), Maine (6), Nevada (6), Wisconsin (6), ~~Indiana (5),~~ New York (6), Indiana (5), Illinois (4), Massachusetts ~~(5)~~(4), New Jersey (4), Michigan (3), South Carolina (3), New Hampshire (2), Ohio (2), Tennessee (2), Utah (2), Alabama (1), ~~Iowa (1),~~ Kentucky (1), Montana ~~(1), New Hampshire~~ (1), and British Columbia (1).

This report includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. When used, words such as “anticipate,” “expect,” “believe,” “project,” “intend,” “may be” and “will be” and similar words or phrases, or the negative thereof, unless the context requires otherwise, are intended to identify forward-looking statements. These forward-looking statements are subject to numerous assumptions, risks and uncertainties, including, but not limited to:

	•		in the age-qualified properties, home sales results could be impacted by the ability of potential homebuyers to sell their existing residences as well as by financial markets volatility;

	•		in the all-age properties, results from home sales and occupancy will continue to be impacted by local economic conditions, lack of affordable manufactured home financing, and competition from alternative housing options including site-built single-family housing;

	•		our ability to maintain rental rates and occupancy with respect to properties currently owned or pending acquisitions;

	•		our assumptions about rental and home sales markets;

	•		the completion of pending acquisitions and timing with respect thereto;

	•		ability to obtain financing or refinance existing debt;

	•		the effect of interest rates;

	•		whether we will consolidate Privileged Access and the effects on our financials if we do so; and

	•		other risks indicated from time to time in our filings with the Securities and Exchange Commission.

These forward-looking statements are based on management’s present expectations and beliefs about future events. As with any projection or forecast, these statements are inherently susceptible to uncertainty and changes in circumstances. The Company is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements whether as a result of such changes, new information, subsequent events or otherwise.

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The following chart lists the Properties acquired, invested in, or sold since January 1, ~~2006.~~2007.


Property	Transaction Date	Sites
Total Sites as of January 1, ~~2006~~2007			~~106,337~~112,956

Property or Portfolio (# of Properties in parentheses):
~~Thousand Trails (2)~~	~~April 14, 2006~~		~~624~~
~~Mid-Atlantic Portfolio (7)~~	~~April 25, 2006~~		~~1,594~~
~~Tranquil Timbers (1)~~	~~June 13, 2006~~		~~270~~
~~Outdoor World Portfolio (15)~~	~~December 15, 2006~~		~~3,962~~
Pine Island RV Resort (1)	August 3, 2007		363
Santa Cruz RV Ranch (1)	September 26, 2007		106
Tuxbury Resort (1)	October 11, 2007		305
Grandy Creek (1)	January 14, 2008		179
Lake George Schroon Valley Resort (1)	January 23, 2008		151

~~Joint Ventures:~~
~~Morgan Portfolio (5)~~	~~Various, 2006~~		~~1,134~~
Expansion Site Development and other:
Sites added ~~(reconfigured) in 2006~~			~~134~~
~~Sites added (reconfigured)~~reconfigured in 2007			775
Sites added reconfigured in 2008			26
Peter’s Pond –Morgan Portfolio JV(1)	March 13, 2008		(270	)

Dispositions:
~~Indian Wells (Joint Venture)~~	~~April 18, 2006~~		~~(350~~	)
~~Forest Oaks~~	~~April 25, 2006~~		~~(227~~	)
~~Windsong~~	~~April 25, 2006~~		~~(268~~	)
~~Blazing Star (Joint Venture)~~	~~June 29, 2006~~		~~(254~~	)
Lazy Lakes (1)	January 10, 2007		(100	)
Del Rey (1)	July 6, 2007		(407	)
Holiday Village, Iowa (1)	November 30, 2007		(519	)

Total Sites as of ~~September 30, 2007~~March 31, 2008			~~112,925~~112,865

Since December 31, ~~2005,~~2006, the gross investment in real estate has increased from ~~$2,153~~$2,337 million to ~~$2,375~~$2,404 million as of ~~September 30, 2007.~~

~~Outlook~~March 31, 2008.

Occupancy in our Properties as well as our ability to increase rental rates directly affects revenues. Our revenue streams are predominantly derived from customers renting our sites on a long-term basis. Revenues are subject to seasonal fluctuations and as such quarterly interim results may not be indicative of full fiscal year results.

We have approximately ~~64,400~~64,900 annual sites, approximately ~~8,300~~8,800 seasonal sites which are leased to customers generally for three to six months, and approximately ~~9,300~~8,800 transient sites occupied by customers who lease sites on a short-term basis. We expect to service over 100,000 customers with these transient sites. However, we consider this revenue stream to be our most volatile. It is subject to weather conditions, gas prices, and other factors affecting the marginal RV customer’s vacation and travel preferences. Finally, we have approximately ~~24,100~~24,300 membership sites for which we currently receive ground rent of approximately ~~$21.1~~$25.5 million annually. This rent is classified in Income from other investments, net in the Consolidated Statements of Operations. We also have interests in Properties containing approximately ~~6,800~~6,000 sites for which revenue is classified as Equity in income from unconsolidated joint ventures in the Consolidated Statements of Operations.


	Total Sites as of		Total Sites as of		Total Sites as of		Total Sites as of
	September 30,		December 31,		March 31,		December 31,
	2007		2006		2008		2007
	(rounded to 000s)		(rounded to 000s)		(rounded to 000s)		(rounded to 000s)
Community sites (1)		45,300		45,700		44,800		44,800
Resort sites (2):
Resort sites:
Annual		19,100		18,900		20,100		20,100
Seasonal		8,300		8,000		8,800		8,700
Transient		9,300		8,800		8,800		8,800
Membership ~~(3)~~(2)		24,100		24,100		24,300		24,100
Joint Ventures ~~(4)~~(3)		6,800		7,500		6,000		6,300

		112,900		113,000		112,800		112,800

Our home sales volumes and gross profits have been declining since 2005. We believe that the disruption in the site-built housing market may be contributing to the decline in our home sales operations, as potential customers are not able to sell their existing site-built homes as well as increased price sensitivity for seasonal and second homebuyers. A number of factors have contributed to this disruption. In the last few years, many site-built home sales were for speculative or investment purposes. Innovative financing techniques, such as loan securitizations, provided increased credit access and resulted in overbuilding and excess site-built home supply. Bad lending practices, like no money down, diminished underwriting, longer amortization periods and aggressive appraisals have contributed to loan defaults, repossessions and capital meltdowns. The disruption has not impacted our manufactured home occupancy, however, the anticipated continuation of the decline in our sales volumes may negatively impact occupancy in the future.

In order to maintain and improve existing occupancy, the Company is focusing on new customer acquisition projects. During 2007, we formed an occupancy task force to review our portfolio for opportunities to increase occupancy. The task force is focused on gaining incremental occupancy in our manufactured home portfolio. We have identified a number of options for addressing occupancy, including renewed efforts on whole ownership sales, home rental, fractional sales, and locating financing sources for our customers. We believe that in connection with other customer identification strategies that we have embarked upon, these options will introduce quality customers to our Properties and the lifestyles that we provide. We have determined that it is appropriate to pursue new home rentals in a limited number of age-restricted communities, in order to maintain or incrementally increase occupancy and to continue new home rental activities in California, given the substantial market rent availability.

Privileged Access

Privileged Access has been the owner of Thousand Trails (“TT”) since April 14, 2006. TT’s primary business consists of entering into agreements with individuals to use its properties (the “Agreements”) and has been engaged in such business for almost 40 years. The properties are primarily campgrounds with designated sites for the placement of recreational vehicles to service its membership base of over 100,000 families. The campgrounds are owned by the Company and leased to Privileged Access. Privileged Access is headquartered in Frisco, Texas, and has more than 2,000 employees and is 100 percent owned by Mr. McAdams, the Company’s President, effective January 1, 2008.

As of March 31, 2008, we are leasing approximately 24,300 sites at 82 resort Properties to Privileged Access or its subsidiaries so that Privileged Access may meet its obligations under the Agreements. For the quarters ended March 31, 2008 and 2007 we recognized approximately $6.4 million and $4.9 million, respectively, in rent from these leasing arrangements. The lease income is included in Income from other investments, net in the Company’s Consolidated Statement of Operations.

Effective January 1, 2008, the leases for these Properties were amended and restated and provide for the following significant terms: a) annual fixed rent of approximately $25.5 million, b) annual rent increases at the higher of CPI or a renegotiated amount based upon the fair market value of the Properties, c) expiration date of January 15, 2020, and d) two 5-year extension terms at the option of Privileged Access. The January 1, 2008 lease for 59 of the Properties known as the “TT Portfolio” also included provisions where the Company paid Privileged Access $1 million for entering into the amended lease. The $1 million payment will be amortized on a pro-rata basis over the remaining term of the lease as an offset to the annual lease payments. Additionally, the Company also agreed to reimburse Privileged Access up to $5 million for the cost of any improvements made to the TT Portfolio if (i) the improvement has been pre-approved, (ii) is a depreciable fixed asset and (iii) supporting documentation is provided. The assets purchased with the capital improvement fund will be the assets of the Company and will be amortized in accordance with the Company’s depreciation policies.

The Company has subordinated its lease payment for the TT Portfolio to a bank that has loaned Privileged Access $5 million as of March 31, 2008. Privileged Access is obligated to pay back $2.5 million of the loan in 2009 and the final $2.5 million in 2010. The Company believes that the possibility that Privileged Access would not make its lease payment on the TT Portfolio as a result of the subordination is remote.

Since June 12, 2006, Privileged Access has leased 130 cottage sites at Tropical Palms, a resort Property located near Orlando, Florida from the Company. For the quarters ended March 31, 2008 and 2007 we earned approximately $0.3 million and $0.4 million, respectively, in rent from this leasing arrangement. The lease income is included in the Resort base rental income in the Company’s Consolidated Statement of Operations. The Tropical Palms lease currently provides for the following significant terms: a) annual fixed rent of approximately $1.4 million,

paid quarterly, b) percentage rent of 50% of the tenants gross revenues in excess of the fixed rent, and c) expiration date of June 30, 2008.

Refer to Note 11 – Transactions with Related Parties included in the Notes to Consolidated Financial Statements in this Form 10-Q for a description of all agreements between the Company and Privileged Access.

Supplemental Property Disclosure

We provide the following disclosures with respect to certain assets:

	•		Monte Vista –Monte Vista is a lifestyle-oriented resort Property located in Mesa, Arizona containing approximately 56 acres of vacant land. We have obtained approval to develop 275 manufactured home and 240 resort sites on this land. In connection with evaluating the development of Monte Vista, we evaluated selling the land and subsequently decided to list 26 acres of the land for sale. We have signed a contract to sell the 26 listed acres for approximately $10 million and the contract anticipates closing in the summer of 2008. No assurances can be given that any sale transaction will occur. With respect to the land not listed for sale, we intend to develop additional resort sites and may consider other alternative uses for the land or sale of the acreage. ~~We anticipate that we will proceed with the development if a sale fails to close.~~

	•		Bulow Plantation –Bulow Plantation is a 628-site mixed lifestyle-oriented resort and manufactured home Property located in Flagler Beach, Florida, which contains approximately 180 acres of adjacent vacant land. We have obtained approval from Flagler County for an additional manufactured home community development of approximately 700 sites on this land. In connection with evaluating the possible development and based on inquiries from single-family home developers, we evaluated a sale of the land. Subsequently, we listed the land

			for sale for a purchase price of $28 million. We anticipate that we will proceed with the development if we determine that any offers or the terms thereof are unacceptable. ELS ~~recently~~ obtained an amendment to the Board of Flagler County Commissioners resolution approving the planned unit development classification of the Property to clarify that resort cottages may be installed and set forth standards for the installation of resort cottages. This amendment may impact the plans for the future development.

	•		Holiday Village, Florida– Holiday Village is a 128-site manufactured home ~~community~~Property located in Vero Beach, Florida, on approximately 20 acres of land. As a result of the 2004 hurricanes, this Property is less than 50% occupied. The residents have been notified that the Property was listed for sale for a purchase price of $6 million.

~~Privileged Access~~

Privileged Access is leasing sites at certain of our Properties for the purpose of offering flexible use products. These products may include the sale of timeshare or fractional interests in resort homes or cottages and membership and vacation-club products. Leasing our sites to Privileged Access allows us to participate in these products and activities while achieving long-term rental of our sites. We expect to lease additional sites to Privileged Access for this purpose at other Properties in the future.

~~As of September 30, 2007, we are leasing approximately 24,100 sites at 81 membership campground resort Properties to Privileged Access or its subsidiaries. The Properties being leased are as follows:~~

	•		~~Thousand Trails Portfolio~~– This portfolio contains 59 Properties and 18,535 sites, which were leased to Privileged Access on April 14, 2006 for approximately 14 years. The current annual lease payment is approximately $17.9 million and is subject to annual CPI escalations.

	•		~~Mid-Atlantic Portfolio~~– This portfolio contains seven Properties and 1,594 sites, which were leased to Privileged Access on April 25, 2006. The current lease expires January 31, 2008 and we anticipate extending the lease on a short-term basis. The current annual lease payment is approximately $0.7 million.

	•		~~Outdoor World Portfolio~~– This portfolio contains 15 Properties and 3,962 sites, which were leased to Privileged Access on December 15, 2006. This lease was renewed on June 1, 2007, and was extended until January 15, 2020 to be co-terminus with the lease for the Thousand Trails portfolio. The annual lease payment was increased to $2.5 million from $1.0 million. The lease now allows Privileged Access to offer a limited number of upgraded memberships to existing Thousand Trails members, which would allow access to the 15 Outdoor World resorts.

We expect to continue this type of leasing activity with Privileged Access, as well as exploring other products and services. One example of such a lease is a one-year lease with Privileged Access for 130 sites at Tropical Palms, a Property located near Orlando, Florida, for an annual rate of approximately $1.3 million. Privileged Access intends to sell fractional interests in some resort homes at this Property.

On April 14, 2006, we loaned Privileged Access approximately $12.3 million at a per annum interest rate of prime plus 1.5%, maturing in one year and secured by Thousand Trails membership sales contract receivables. During the nine months ending September 30, 2007, we received principal repayments of $12.3 million. In connection with the payoffs, Privileged Access obtained a $10.0 million loan from a bank and the Company guaranteed $2.5 million of this loan. See Note 10 – Commitments and Contingencies for further discussion of this guarantee.

Critical Accounting Policies and Estimates

Refer to the ~~2006~~2007 Form 10-K for a discussion of our critical accounting policies, which includes impairment of real estate assets and investments, investments in unconsolidated joint ventures, and accounting for stock compensation. During the ~~nine months~~quarter ended ~~September 30, 2007,~~March 31, 2008, there were no changes to these policies.

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Results of Operations

The results of operations for the ~~three~~two Properties designated as held for disposition as of ~~September 30,~~March 31, 2008 and three Properties sold in 2007, pursuant to SFAS No. 144 ~~two Properties sold in April of 2006, one Property sold in January of 2007, and one Property sold in July of 2007~~ have been classified as income from discontinued operations. See Note 4 of the Notes to ~~the~~ Consolidated Financial Statements contained in this Form 10-Q for summarized information for these Properties.

Comparison of the Quarter Ended ~~September 30, 2007~~March 31, 2008 to the Quarter Ended ~~September 30, 2006~~March 31, 2007

The following table summarizes certain financial and statistical data for the Property Operations for all Properties owned throughout both periods (“Core Portfolio”) and the Total Portfolio for the quarters ended ~~September 30,~~March 31, 2008 and 2007 ~~and 2006~~ (amounts in thousands).


	Core Portfolio									Total Portfolio									Core Portfolio										Total Portfolio
					Increase /		%							Increase /		%							Increase /			%							Increase /		%
	2007		2006		(Decrease)		Change			2007		2006		(Decrease)		Change			2008		2007		(Decrease)			Change			2008		2007		(Decrease)		Change
Community base rental income	$	58,353	$	55,904	$	2,449		4.4	%	$	59,366	$	56,877	$	2,489		4.4	%	$	61,034	$	58,799	$	2,235			3.8	%	$	61,034	$	58,799	$	2,235		3.8	%
Resort base rental income		21,970		20,889		1,081		5.2	%		25,557		22,833		2,724		11.9	%		33,091		31,581		1,510			4.8	%		34,597		31,721		2,876		9.1	%
Utility and other income		8,677		7,284		1,393		19.1	%		9,273		7,539		1,734		23.0	%		10,624		10,089		535			5.3	%		10,791		10,100		691		6.8	%

Property operating revenues		89,000		84,077		4,923		5.9	%		94,196		87,249		6,947		8.0	%		104,749		100,469		4,280			4.3	%		106,422		100,620		5,802		5.8	%

Property operating and Maintenance		30,836		28,769		2,067		7.2	%		33,252		30,125		3,127		10.4	%		32,940		31,127		1,813			5.8	%		33,769		31,189		2,580		8.3	%
Real estate taxes		6,701		6,526		175		2.7	%		7,037		6,780		257		3.8	%		7,336		7,350		(14	)		(0.2	%)		7,440		7,358		82		1.1	%
Property management		4,347		4,086		261		6.4	%		4,576		4,301		275		6.4	%		5,029		4,658		371			8.0	%		5,294		4,658		636		13.7	%

Property operating expenses		41,884		39,381		2,503		6.4	%		44,865		41,206		3,659		8.9	%		45,305		43,135		2,170			5.0	%		46,503		43,205		3,298		7.6	%


Income from property operations	$	47,116	$	44,696	$	2,420		5.4	%	$	49,331	$	46,043	$	3,288		7.1	%	$	59,444	$	57,334	$	2,110			3.7	%	$	59,919	$	57,415	$	2,504		4.4	%

Home Sales Operations

The following table summarizes certain financial and statistical data for the Home Sales Operations for the quarters ended ~~September 30,~~March 31, 2008 and 2007 ~~and 2006~~ (dollars in thousands).


	2007			2006			Variance			% Change			2008			2007			Variance			% Change
Gross revenues from new home sales	$	8,019		$	15,949		$	(7,930	)		(49.7	%)	$	5,800		$	8,499		$	(2,699	)		(31.8	%)
Cost of new home sales		(7,424	)		(14,650	)		7,226			(49.3	%)		(6,229	)		(7,522	)		1,293			17.2	%

Gross profit from new home sales		595			1,299			(704	)		(54.2	%)
(Loss) gross profit from new home sales														(429	)		977			(1,406	)		(143.9	%)

Gross revenues from used home sales		464			628			(164	)		(26.1	%)		395			608			(213	)		(35.0	%)
Cost of used home sales		(693	)		(475	)		(218	)		45.9	%		(521	)		(595	)		74			12.4	%

Gross (loss) profit from used home sales		(229	)		153			(382	)		(249.7	%)
(Loss) gross profit from used home sales														(126	)		13			(139	)		(1,069.2	%)

Brokered resale revenues, net		305			448			(143	)		(31.9	%)		367			493			(126	)		(25.6	%)
Home selling expenses		(1,845	)		(2,472	)		627			(25.4	%)		(1,513	)		(2,251	)		738			32.8	%
Ancillary services revenues, net		799			700			99			14.1	%		1,448			1,540			(92	)		(6.0	%)


(Loss) Income from home sales operations	$	(375	)	$	128		$	(503	)		(393.0	%)	$	(253	)	$	772		$	(1,025	)		(132.8	%)


Home sales volumes
New home sales (1)		113			220			(107	)		(48.6	%)		124			122			2			1.6	%
Used home sales (2)		69			117			(48	)		(41.0	%)		61			83			(22	)		(26.5	%)
Brokered home resales		202			271			(69	)		(25.5	%)		240			299			(59	)		(19.7	%)

~~Comparison~~seller financing in excess of ~~the Nine Months Ended September 30, 2007 to the Nine Months Ended September 30, 2006~~

The following table summarizes certain financial and statistical data for the Property Operations for all Properties owned throughout both periods (“Core Portfolio”) and the Total Portfolio for the nine months ended September 30, 2007 and 2006 (amounts in thousands).

Core Portfolio Total Portfolio
Increase / % Increase / %
2007 2006 (Decrease) Change 2007 2006 (Decrease) Change
Community base rental income $ 174,179 $ 166,549 $ 7,630 4.6 % $ 177,190 $ 168,617 $ 8,573 5.1 %
Resort base rental income 69,271 65,501 3,770 5.8 % 79,336 69,480 9,856 14.2 %
Utility and other income 26,831 22,868 3,963 17.3 % 28,551 23,445 5,106 21.8 %

Property operating revenues 270,281 254,918 15,363 6.0 % 285,077 261,542 23,535 9.0 %

Property operating and maintenance 89,159 84,550 4,609 5.5 % 95,681 87,229 8,452 9.7 %
Real estate taxes 20,708 19,589 1,119 5.7 % 21,646 20,122 1,524 7.6 %
Property management 13,243 13,120 123 0.9 % 13,940 13,526 414 3.1 %

Property operating expenses 123,110 117,259 5,851 5.0 % 131,267 120,877 10,390 8.6 %

Income from property operations $ 147,171 $ 137,659 $ 9,512 6.9 % $ 153,810 $ 140,665 $ 13,145 9.3 %

~~Property Operating Revenues~~

~~The 6.0% increase in the Core Portfolio property operating revenues reflects: (i) a 4.2% increase in rates in~~ our community base rental income combined with a 0.4% increase in occupancy, (ii) a 5.8% increase in revenues for our resort base income, and (iii) an increase in utility and other income due to increased pass-throughs at certain Properties. Total Portfolio Property operating revenues increased due to rate increases and our 2006 and 2007 acquisitions.

~~Property Operating Expenses~~

The 5.0% increase in property operating expenses in the Core Portfolio reflects a 5.5% increase in property operating and maintenance expense due primarily to increases in payroll, utilities and repairs and maintenance. The increase in real estate taxes in the Core Portfolio is generally due to higher property assessmentsbasis on certain Properties. Our Total Portfolio property operating expenses increased due to higher utility expenses, and our 2006 and 2007 acquisitions. Total Portfolio property management expense increased slightly due to increased payroll costs.

~~Home Sales Operations~~

~~The following table summarizes certain financial and statistical data for the Home Sales Operations for the nine months ended September 30, 2007 and 2006 (dollars in thousands).~~

2007 2006 Variance % Change
Gross revenues from new home sales $ 25,045 $ 44,637 $ (19,592 ) (43.9 %)
Cost of new home sales (22,301 ) (39,581 ) 17,280 (43.7 %)

Gross profit from new home sales 2,744 5,056 (2,312 ) (45.7 %)

Gross revenues from used home sales 1,722 1,940 (218 ) (11.2 %)
Cost of used home sales (2,063 ) (1,648 ) (415 ) 25.2 %

Gross (loss) profit from used home sales (341 ) 292 (633 ) (216.8 %)

Brokered resale revenues, net 1,248 1,723 (475 ) (27.6 %)
Home selling expenses (5,845 ) (7,386 ) 1,541 (20.9 %)
Ancillary services revenues, net 2,223 2,706 (483 ) (17.8 %)

Income from home sales operations $ 29 $ 2,391 $ (2,362 ) (98.8 %)

Home sales volumes

New home sales (1) 346 574 (228 ) (39.7 %)
Used home sales (2) 224 297 (73 ) (24.6 %)
Brokered home resales 769 1015 (246 ) (24.2 %)


~~(1)~~		~~Includes third party home sales of 37 and 46 for the nine months ending September 30, 2007 and 2006, respectively.~~

~~(2)~~		~~Includes third party home sales of five and nine for the nine months ending September 30, 2007 and 2006, respectively.~~

Income from home sales operations decreased due to lower new, used, and brokered resale volumes and lower gross profits per home sold. The decline in gross profits was partially offset by decreased home selling expenses as a result of lower sales volumes and decreased advertising costs.

~~Other Income and Expenses~~

~~The following table summarizes other income and expenses for the nine months ended September 30, 2007 and 2006 (amounts in thousands).~~

2007 2006 Variance % Change
Interest income $ 1,458 $ 1,434 $ 24 1.7 %
Income from other investments, net 15,407 15,454 (47 ) (0.3 %)
General and administrative (11,146 ) (10,342 ) (804 ) 7.8 %
Rent control initiatives (2,157 ) (499 ) (1,658 ) 332.3 %
Interest and related amortization (77,420 ) (77,167 ) (253 ) 0.3 %
Depreciation on corporate assets (337 ) (312 ) (25 ) 8.0 %
Depreciation on real estate assets (47,232 ) (44,570 ) (2,662 ) 6.0 %

Total other expenses, net $ (121,427 ) $ (116,002 ) $ (5,425 ) 4.7 %

~~Interest income increased due to interest income from tax deferred exchange account escrow balances,~~one Lakeshore investment, offset by a ~~decrease~~$2.1 million gain from distributions received from debt re-financings by one Diversified joint venture in ~~interest received on our Privileged Access note, which was fully paid off in the third quarter of~~ 2007. Income from other investments, net decreased due to the $1.0 gain on sale of College Heights in the third quarter of 2006 offset by the previously discussed increase in ground lease activity with Privileged Access. General and

Liquidity and Capital Resources

Liquidity

As of ~~September 30, 2007,~~March 31, 2008, the Company had ~~$3.7~~$2.6 million in cash and cash equivalents and ~~$272.1~~$287.9 million available on its lines of credit. The Company expects to meet its short-term liquidity requirements, including its distributions, generally through its working capital, net cash provided by operating activities, proceeds from sale of Properties and availability under the existing lines of credit. The Company expects to meet certain long-term liquidity requirements such as scheduled debt maturities, Property acquisitions, and capital improvements by using long-term collateralized and uncollateralized borrowings, including borrowings under its existing lines of credit, and the issuance of debt securities or additional equity securities in the Company, in addition to working capital. The table below summarizes cash flow activity for the ~~nine months~~quarters ended ~~September 30,~~March 31, 2008 and 2007 ~~and 2006~~ (amounts in thousands).


	For the nine months ended						For the quarters ended
	September 30,						March 31,
	2007			2006			2008			2007
Cash provided by operating activities	$	91,827		$	77,649		$	40,040		$	42,012
Cash used in investing activities		(19,138	)		(42,470	)
Cash (used in) provided by investing activities								(11,237	)		1,455
Cash used in financing activities		(70,591	)		(35,789	)		(32,021	)		(45,072	)

Net increase (decrease) in cash	$	2,098		$	(610	)
Net decrease in cash							$	(3,218	)	$	(1,605	)

On January 23, 2008, we acquired a 151-site resort Property known as Lake George Schroon Valley Resort on approximately 20 acres in Warrensburg, New York. The purchase price was approximately $2.1 million and was funded by proceeds from the tax-deferred exchange account established as a result of the November 2007 sale of Holiday Village-Iowa.

2007 Acquisitions

On January 29, 2007, the Company acquired the remaining 75% interest in a joint venture Property known as Mesa Verde, which is a 345-site resort Property on approximately 28 acres in Yuma, Arizona. The gross purchase price was approximately $5.9 million. We assumed a first mortgage loan of approximately $3.5 million with an interest rate of 4.94% per annum, maturing in May 2008. The remainder of the acquisition price, net of a credit for our existing 25% interest, was funded with a withdrawal from the tax-deferred exchange account established as a result of the disposition of Lazy Lakes discussed below.

On June 27, 2007, the Company purchased the remaining 75% interest in a Diversified Investments joint venture Property known as Winter Garden, which is a 350-site resort Property on approximately 27 acres in Winter Garden, Florida. The gross purchase price was approximately $10.9 million, and we assumed a second mortgage loan of approximately $4.0 million with an interest rate of 4.3% per annum, maturing in September 2008. The remainder of the acquisition price, net of a credit for our existing 25% interest, was funded with proceeds from the Company’s lines of credit and a withdrawal of approximately $3.7 million from the tax-deferred exchange account established as a result of the disposition of Lazy Lakes discussed below.

On August 3, 2007, the Company acquired a 363-site resort Property known as Pine Island that is located near St. James City, Florida. The purchase price of approximately $6.5 million was funded with a withdrawal from the tax-deferred account established as a result of the sale of Del Rey discussed below.

~~On September 26, 2007, the Company acquired a 106-site resort Property known as Santa Cruz RV Ranch that is located near Scotts Valley, California. The purchase price was approximately $5.5 million.~~

~~2006 Acquisitions~~

On March 22, 2006, the Company purchased the remaining interest in the Mezzanine Properties (the “Mezzanine Portfolio”) in which we had initially invested approximately $30.0 million to acquire preferred equity interests during the first quarter of 2004. The Mezzanine Portfolio consists of 11 Properties containing 5,057 sites: five Properties are located in Arizona, four in Florida, and one each in North Carolina and South Carolina. The total purchase price was approximately $105.0 million, including our existing investment in these Properties of $32.2 million and our general partnership investment of $1.4 million. The acquisition was funded by new debt financing of $47.1 million and assumed debt of approximately $25.9 million. Net working capital acquired included $3.2 million of rents received in advance and $0.4 million in other net payables. In connection with this acquisition we also purchased $1.9 million of inventory.

On April 14, 2006, the Company purchased two additional Thousand Trails Properties, located in California and Florida, and certain personal property for $10.0 million. These Properties were leased back to Privileged Access (see Privileged Access discussion above). The acquisition was funded from our lines of credit.

On April 25, 2006, the Company purchased seven lifestyle-oriented Properties, which contain 1,594 sites including 950 acres of developable expansion land and are located in Florida, New York, North Carolina, South Carolina, Michigan, Kentucky and Alabama. The total purchase price of approximately $14.3 million was funded by the exchange of two all-age Properties, located in Indiana, previously held for sale containing 495 sites, and $5.0 million in cash. We provided short-term seller financing of $3.4 million, which was repaid in August 2006. Net working capital acquired included $0.6 million of rents received in advance. The acquisition was funded from our lines of credit.

On June 13, 2006, the Company purchased Tranquil Timbers, a Property located in Door County, Wisconsin, containing 270 sites for a total purchase price of $2.8 million. The acquisition was funded from our lines of credit. Certain purchase price adjustments may be made within one year following the acquisitions.

Dispositions

On January 10, 2007, we sold Lazy Lakes, a 100-site resort Property in the Florida Keys, for proceeds of approximately $7.7 million. The Company recognized a gain of approximately $4.6 million. In order to defer the taxable gain on the sale of Lazy Lakes, the sales proceeds, net of an eligible distribution of $2.4 million, were deposited in a tax-deferred exchange account. The funds in the exchange account were used in the Mesa Verde acquisition discussed above and the Winter Garden ~~acquisitions discussed above.~~

On July 6, 2007, we sold Del Rey, a 407 site Property in Albuquerque, New Mexico, for proceeds of approximately $13 million. The Company recognized a gain of approximately $6.9 million. These proceeds were deposited in a tax-deferred exchange account pending future like-kind exchange acquisitions. As of September 30, 2007, approximately $6.4 million of the proceeds have not been used for acquisitions.acquisition on June 27, 2007.

We currently have ~~three~~two family Properties held for disposition, which are in various stages of negotiations. We plan to reinvest the proceeds or reduce outstanding lines of credit with the proceeds from these dispositions.

We continue to look at acquiring additional assets and are at various stages of negotiations with respect to potential acquisitions. Funding is expected to ~~be provided by~~come from either proceeds from potential dispositions, lines of credit draws, or other financing.

~~Notes Receivable Activity~~

As of December 31, 2006, we had a note receivable from Privileged Access of approximately $12.3 million. During the quarter ended March 31, 2007, we received a principal repayment of $7.3 million and during the quarter ending September 30, 2007 we received the remaining principal repayment of $5.0 million. The remaining $1.6 million in cash outflow reflects net lending activity from our Chattel Loans.

Investments in and distributions from unconsolidated joint ventures

During the ~~nine months~~quarter ended ~~September 30, 2007,~~March 31, 2008, the Company invested approximately ~~$3.0~~$5.5 million in its joint ventures ~~mainly~~to purchase an additional 25% interest in ~~developing Properties at our Maine joint venture.~~Voyager RV. The Company also received approximately $0.4 million held for the initial investment in one of the Morgan Properties.

During the ~~nine months~~quarter ended ~~September 30,~~March 31, 2008, the Company received approximately $1.0 million in distributions from our joint ventures that were classified as return on capital and were included in operating activities. Of these distributions, $0.6 million relates to the gain on the payoff of our share of seller financing in excess of our basis on one Lakeshore investment.

During the quarter ended March 31, 2007, the Company received approximately ~~$3.9~~$2.7 million in distributions from our joint ventures. Approximately ~~$3.8~~$2.6 million of these distributions were classified as return on capital and were included in operating activities. The remaining distributions ~~of approximately $0.1 million were classified as a return of capital and were included in investing activities.~~

During the nine months ended September 30, 2006, the Company received approximately $4.3 million in distributions from our joint ventures including proceeds from the sale of Indian Wells, a property owned by one of our joint ventures in April 2006. Approximately $2.7 million of these distributions were classified as return on capital and were included in operating activities. The remaining $1.6 million of these distributions were classified as a return of capital and were included in investing activities.

~~Proceeds~~Notes Receivable Activity

The notes receivable activity during the first quarter of 2008, of $0.1 million in cash outflow reflects net lending from ~~Sale of Investment~~our Chattel Loans.

During the first quarter ~~ended September 30, 2006, the Company sold its preferred partnership interest in College Heights for approximately $9.0 million. At the time~~ of ~~the sale, College Heights owned~~2007, we received a ~~portfolio~~principal repayment of ~~11 properties with approximately 1,900 sites located in Michigan, Ohio and Florida. The proceeds received represent~~$7.3 million on a ~~per site value~~note receivable from Privileged Access of approximately ~~$22,000.~~$12.3 million, which was repaid in full during 2007. The remaining notes receivable activity of $0.3 million in cash outflow reflects net lending from our Chattel Loans.

Capital Improvements

~~Capital expenditures for~~The Company identifies capital improvements ~~are identified by the Company~~ as recurring capital expenditures on rental properties (“Recurring CapEx”), site development costs and corporate costs. Recurring CapEx was approximately ~~$10.9~~$2.2 million and ~~$8.6~~$3.3 million for the ~~nine months~~quarters ended ~~September 30,~~March 31, 2008 and 2007, ~~and 2006,~~ respectively. Site development costs were approximately ~~$9.1~~$2.0 million and ~~$13.9~~$2.9 million for the ~~nine months~~quarters ended ~~September 30,~~March 31, 2008 and 2007, ~~and 2006,~~ respectively, and represent costs to develop expansion sites at certain of the Company’s Properties and costs for improvements to sites when a smaller used home is replaced with a larger new home. Reduction in site development costs is due to the decrease in new home sales ~~volumes. In addition, during the nine months ended September 30, 2007 and 2006, we spent $1.4 million and $1.5 million, respectively, on capitalized Hurricane related repairs.~~volume (excluding third party dealer sales).

Financing Activities

Financing, Refinancing and Early Debt Retirement

2008 Activity

During the quarter ended March 31, 2008, we had approximately $4.8 million in principal repayments on mortgage debt.

2007 Activity

During the quarter ended ~~September 30, 2007, the company repaid the outstanding mortgage indebtedness on Ft. Myers Beach of approximately $2.9 million.~~

~~In connection with the acquisition of Mesa Verde, during the first quarter of~~March 31, 2007, the Company ~~assumed $3.5 million in mortgage debt bearing interest at 4.94% per annum and maturing in May 2008. In connection with~~completed the acquisition of Winter Garden, during the second quarter of 2007, the Company assumed $4.0 million in mortgage debt bearing interest at 4.3% per annum and maturing in September 2008. In addition, the Company

~~repaid approximately $1.9 million of mortgage debt in connection with the sale of Lazy Lakes. Refer to Note 4 - Investment in Real Estate for acquisition and disposition activity.~~following transactions:

~~2006 Activity~~

During the nine months ended September 30, 2006, the Company assumed $25.9 million in mortgage debt on four of the eleven Properties related to the acquisition of the Mezzanine Portfolio. This debt was subsequently defeased and refinanced in the same year. In addition, the Company financed $47.1 million of mortgage debt to acquire the remaining seven Properties in the Mezzanine Portfolio. The seven mortgages bear interest at weighted average rates ranging from 5.70% to 5.72% per annum, and mature in April 2016.

We received approximately $5.9 million in new financing proceeds from an earn-out on debt secured by the Monte Vista Property and the Viewpoint Property and a refinancing we completed in the second quarter 2006. These proceeds were used to pay down the lines of credit.

We replaced the term loan, which had a remaining balance of $100 million maturing in 2007 and $160 million in lines of credit maturing in August 2006 with $275 million in lines of credit with a four-year maturity and one-year extension option. The new facilities bear interest at LIBOR plus 1.20% per annum with a 0.15% facility fee per annum. The interest rate on the term loan was LIBOR plus 1.75% per annum and the $160 million lines of credit had an interest rate of LIBOR plus 1.65% and had a 0.15% unused fee, both per annum.

~~We also acquired land for $2.4 million, in the third quarter 2006, subject to a ground lease previously classified as mortgage debt relating to the Golden Terrace South Property.~~

	•		The Company repaid approximately $1.9 million of mortgage debt in connection with the sale of Lazy Lakes on January 10, 2007.

	•		In connection with the acquisition of Mesa Verde, during the first quarter of 2007, the Company assumed $3.5 million in mortgage debt bearing interest at 4.94% per annum and maturing in May 2008.

Secured Debt

As of ~~September 30, 2007,~~March 31, 2008, our secured long-term debt balance was approximately $1.6 billion, with a weighted average interest rate including amortization in ~~2007~~2008 of approximately 6.1% per annum. The debt bears interest at rates between 4.3% and 10.0% per annum and matures on various dates mainly ranging from ~~2007~~2008 to 2016. Included in our debt balance are three capital leases with an imputed interest rate of 13.1% per annum. The Company has $200 million of secured debt that matures in 2008. During the quarter ended March 31, 2008, we locked a rate on $140 million of financing with Fannie Mae on nine manufactured home Properties, most of which have existing secured debt. We ~~do not~~ have ~~any significant long-term debt maturing~~a rate of 5.76% locked on $25.8 million of financing for 60 days and a rate of 5.91% locked on $114.4 million for 180 days. We initially paid a $2.9 million cash deposit for the rate lock which was refunded to us in ~~2007 or~~April 2008 ~~with $216 million being~~as the lender agreed to allow us to guarantee the deposit instead of requiring a cash deposit.

The maximum amount maturing in any of the succeeding 5five years beginning in ~~2008.~~2009 is $297.8 million. The weighted average term to maturity for the long-term debt is approximately ~~5.5~~5.2 years.

In April 2008, the Company closed on two of the nine Fannie Mae loans for total financing proceeds of approximately $25.8 million bearing interest of 5.76% and maturing on May 1, 2018. The proceeds were used to refinance a $6.7 million mortgage on Holiday Village, in Ormond Beach, Florida, and to pay down $15 million of our unsecured lines of credit and for other working capital purposes.

Unsecured Debt

~~In September of 2007, we completed an amendment of existing~~We have two unsecured Lines of Credit (“LOC”) ~~to expand our borrowing capacity from $275 million to $420 million. Prior to the amendment, the Company had a $225 million line~~ of ~~credit and a $50 million line of credit. The amendment increased the $225 million LOC to~~ $400 million and ~~decreased the $50~~$20 million ~~LOC to $20 million. The lines of credit continue to accrue~~that bear interest at a rate of LIBOR plus a maximum of 1.20% per annum, have a 0.15% facility fee, mature on June 30, 2010, and have a one-year extension option. Our current group of banks have committed up to $370 million on our $420 million borrowing capacity. The ~~Company incurred commitment and arrangement fees of approximately $0.3 million to increase its borrowing capacity.~~

~~The~~ weighted average interest rate in ~~2007~~the first quarter of 2008 for our unsecured debt was approximately ~~6.8%~~5.49% per annum. ~~Throughout~~During the ~~nine months~~quarter ended ~~September 30, 2007,~~March 31, 2008, we borrowed ~~$81.1~~$39.8 million and paid

On ~~September 28, 2007, June 29, 2007 and~~ March 30, 2007, the Operating Partnership paid distributions of 8.0625% per annum on the $150 million Series D 8% Units and 7.95% per annum on the $50 million of Series F 7.95% Units.

During the ~~nine months~~quarter ended ~~September 30,~~March 31, 2007, we received approximately ~~$3.4~~$2.5 million in proceeds from the issuance of shares of common stock through stock option exercises and the ~~Company’s Employee Stock Purchase Plan (“ESPP”).~~

~~2006 Activity~~

On October 13, 2006, we paid a $0.075 per share distribution for the quarter ended September 30, 2006 to the stockholders of record on September 29, 2006. On July 14, 2006, we paid a $0.075 per share distribution for the quarter ended June 30, 2006 to the stockholders of record on June 30, 2006. On April 14, 2006, the Company paid a $0.075 per share distribution for the quarter ended March 31, 2006 to stockholders of record on March 31, 2006. On September 29, 2006, June 30, 2006 and March 31, 2006, the Operating Partnership paid distributions of 8.0625% per annum on the $150 million of Series D 8% Units and 7.95% per annum on the $50 million of Series F 7.95% Units.

~~During the nine months ended September 30, 2006, we received approximately $3.5 million in proceeds from the issuance of shares of common stock through stock option exercises and the Company’s~~ ESPP.

Inflation

Substantially all of the leases at the Properties allow for monthly or annual rent increases which provide the Company with the opportunity to achieve increases, where justified by the market, as each lease matures. Such types of leases generally minimize the risk of inflation to the Company.

Funds From Operations

Funds from Operations (“FFO”) is a non-GAAP financial measure. We believe FFO, as defined by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”), to be an appropriate measure of performance for an equity REIT. While FFO is a relevant and widely used measure of operating performance for equity REITs, it does not represent cash flow from operations or net income as defined by GAAP, and it should not be considered as an alternative to these indicators in evaluating liquidity or operating performance.

FFO is defined as net income, computed in accordance with GAAP, excluding gains or losses from sales of ~~properties,~~Properties, plus real estate related depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO on the same basis. We believe that FFO is helpful to investors as one of several measures of the performance of an equity REIT. We further believe that by excluding the ~~effects~~effect of depreciation, amortization and gains or losses from sales of real estate, all of which are based on historical costs and which may be of limited relevance in evaluating current performance, FFO can facilitate comparisons of operating performance between periods and among other equity REITs. Investors should review FFO, along with GAAP net income and cash flow from operating activities, investing activities and financing activities, when evaluating an equity REIT’s operating performance. We compute FFO in accordance with standards established by NAREIT, which may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently than we do. FFO does not represent cash generated from operating activities in accordance with GAAP, nor does it represent cash available to pay distributions and should not be considered as an alternative to net income, determined in accordance with GAAP, as an indication of our financial performance, or to cash flow from operating activities, determined in accordance with GAAP, as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make cash distributions.

Item 3. Quantitative and Qualitative Disclosure of Market Risk

Market risk is the risk of loss from adverse changes in market prices and interest rates. Our earnings, cash flows and fair values relevant to financial instruments are dependent on prevailing market interest rates. The primary market risk we face is long-term indebtedness, which bears interest at fixed and variable rates. The fair value of our long-term debt obligations is affected by changes in market interest rates. At ~~September 30, 2007,~~March 31, 2008, approximately ~~93%~~94% or approximately ~~$1.6~~$1.5 billion of our outstanding debt had fixed interest rates, which minimizes the market risk until the debt matures. For each increase in interest rates of 1% (or 100 basis points), the fair value of the total outstanding debt would decrease by approximately ~~$86.7~~$78.7 million. For each decrease in interest rates of 1% (or 100 basis points), the fair value of the total outstanding debt would increase by approximately ~~$91.8~~$83.0 million.

At ~~September 30, 2007,~~March 31, 2008, approximately 7%6% or approximately ~~$117~~$94.1 million of our outstanding debt was at variable rates. Earnings are affected by increases and decreases in market interest rates on this debt. For each increase/decrease in interest rates of 1% (or 100 basis points), our earnings and cash flows would increase/decrease by approximately ~~$1.2~~$0.9 million annually.

4239

Part II — Other Information

Item 1. Legal Proceedings

See Note 1012 of the Consolidated Financial Statements contained herein.

Item 1A. Risk Factors

With the exception of the following there have been no material changes to the factors disclosed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, ~~2006.~~2007.

Some Potential Losses Are Not Covered by Insurance.We carry comprehensive insurance coverage for losses resulting from property damage, liability claims and business interruption on all of our Properties. We believe the policy specifications and coverage limits of these policies are adequate and appropriate. There are, however, certain types of losses, such as lease and other contract claims that generally are not insured. Should an uninsured loss or a loss in excess of coverage limits occur, we could lose all or a portion of the capital we have invested in a Property, as well as the anticipated future revenue from the Property. In such an event, we might nevertheless remain obligated for any mortgage debt or other financial obligations related to the Property.

~~During the quarter ended March 31, 2007, we renewed our~~Our property and casualty insurance policies, ~~through~~which expired on March 31, ~~2008. We have~~2008, were renewed for a one-year term. While the property program maintained an overall $100 million ~~property insurance program. The program limits coverage to~~limit, the California Earthquake sublimit was increased from $10 million ~~annually for losses associated with earthquakes and floods. In addition, losses resulting~~to $25 million. The policy deductibles range from ~~hurricanes are limited~~$100,000 to $10 million per occurrence. As we reviewed options available in the market, we determined that deductible amounts would be significantly higher than in previous years. The deductibles related to named windstorms, earthquakes, and floods are five percent of insurable ~~value (property~~ values ~~plus 25~~specifically for named storms, Florida wind, and earthquakes. A deductible indicates ELS’ maximum exposure in event of a loss within policy limit.

Our Accounting Policies and Methods Are the Basis on Which We Report Our Financial Condition and Results of Operations, and They May Require Management to Make Estimates About Matters that Are Inherently Uncertain.One policy that will be critical to the presentation of our financial condition and results of operations in 2008 and beyond is our policy related to Privileged Access. Since April 14, 2006, Privileged Access has been our largest tenant and is currently leasing 82 resort Properties from us. Effective January 1, 2008, the 100 percent owner of ~~business interruption) per occurrence.~~Privileged Access, Mr. Joe McAdams, became our President and we amended and restated the leases for the Properties. Under generally accepted accounting principles, effective January 1, 2008, Mr. McAdams, Privileged Access and the Company are considered related parties. Due to the materiality of the leasing arrangement and the related party nature of the arrangement, the Company has analyzed whether the operations of Privileged Access should be consolidated with ours. We have determined under FIN 46 that it would not be appropriate to consolidate Privileged Access as we do not control Privileged Access and are not the primary beneficiary of Privileged Access. This conclusion required management to make certain judgments. As a result of the complex nature of the arrangements, on February 15, 2008, we submitted a letter to the Office of the Chief Accountant at the SEC describing the relationship and asking for the SEC’s concurrence with our conclusions that we should not consolidate the operations of Privileged Access. The ~~deductibles under~~SEC has concluded its review of our ~~previous policy were two percent of property values per occurrence. The larger deductibles expose us~~letter and does not object to ~~larger potential uninsured losses.~~the Company’s conclusions as described in the letter. If our arrangement with Privileged Access changes in the future, then we will have to reevaluate our conclusion.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Submission of Matters to a Vote of Security Holders

None.

Item 5. Other Information

None.

Item 6. Exhibits


		~~3.8~~	~~(a)~~10.39(a)	Second Amended and Restated ~~Bylaws, effective~~Lease Agreement dated as of ~~August 8, 2007.~~January 1, 2008 by and between Thousand Trails Operations Holding Company, L.P. and MHC TT Leasing Company, Inc.

10.40(a)	Amended and Restated Option Agreement dated as of January 1, 2008, is by and among Privileged Access, LP, a Delaware limited partnership, PATT Holding Company, LLC, a Delaware limited liability company, Outdoor World Resorts, LLC, a Delaware limited liability company, PA-Trails Plus, LLC, a Delaware limited liability company, and Mid-Atlantic Resorts, LLC, a Delaware and MHC T1000 Trust, a Maryland real estate investment trust.

10.41(a)	Employment Agreement dated as of January 1, 2008 by and between Joe McAdams and Equity LifeStyle Properties, Inc.

~~31.1~~10.42(b)	First Amendment to Second Amended and Restated Lease Agreement dated as of March 1, 2008 between MHC TT Leasing Company, Inc. and Thousand Trails Operations Holding Company, L.P.

31.1	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

		31.2		Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

		32.1		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350

		32.2		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350


	~~10.35~~	~~(b)~~	~~Credit Agreement ($400 million Revolving Facility) dated September 21, 2007~~

	~~10.36~~	~~(b)~~	~~Second Amendment and Restated Loan Agreement ($20 million Revolving Facility) dated September 21, 2007~~

	_(a)		Included as an exhibit to the Company’s Report on Form 8-K dated ~~August 8, 2007~~January 4, 2008

_(b)
	~~(b)~~		~~Included as an exhibit to the Company’s Report on Form 8-K dated September 21, 2007~~Filed herewith


	Page
Part I — Financial Information

Item 1. Financial Statements

~~Index To Financial Statements~~Consolidated Balance Sheets as of March 31, 2008 (unaudited) and December 31, 2007		3

Consolidated ~~Balance Sheets as of September 30, 2007 (unaudited) and December 31, 2006~~		3
~~Consolidated~~ Statements of Operations for the quarters ended March 31, 2008 and ~~nine months ended September 30,~~ 2007 ~~and 2006~~ (unaudited)		4

Consolidated Statements of Cash Flows for the ~~nine months~~quarters ended ~~September 30,~~March 31, 2008 and 2007 ~~and 2006~~ (unaudited)		6

Notes to Consolidated Financial Statements		8

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations		2528

Item 3.Quantitative and Qualitative Disclosures About Market Risk		4240

Item 4.Controls and Procedures		4341

Part II — Other Information

Item 1.Legal Proceedings		4442

Item 1A.Risk Factors		4442

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds		4442

Item 3.Defaults Upon Senior Securities		4442

Item 4.Submission of Matters to a Vote of Security Holders		4442

Item 5.Other Information		4443

Item 6.Exhibits		4443
First Amendment to Second Amended and Restated Lease Agreement
302 Certification of Chief Financial Officer
302 Certification of Chief Executive Officer
Section 1350 Certification of Chief Financial Officer
Section 1350 Certification of Chief Executive Officer


	September 30,		September 30,			March 31,		March 31,
	2007		2006			2008		2007
Supplemental Information:
Cash paid during the period for interest	$	76,134	$	75,423		$	24,295	$	25,884
Non-cash investing and financing activities:
Real estate acquisition and disposition
Mortgage debt assumed and financed on acquisition of real estate	$	7,437	$	72,998		$	—	$	3,476
Mezzanine and joint venture investments applied to real estate acquisition	$	182	$	32,118
Other assets and liabilities, net, acquired on acquisition of real estate	$	170	$	4,583		$	36	$	314
Financing fees incurred on acquisition of real estate	$	—	$	(809	)
Proceeds from loan to pay insurance premiums	$	4,300	$	3,638		$	—	$	4,300


								As of
								March 31,			December 31,
Properties Held for Long Term	September 30,				December 31,			2008			2007
	2007				2006
Investment in real estate:
Land	$	532,388			$	525,969		$	539,727		$	538,723
Land improvements		1,674,717				1,642,234			1,696,648			1,690,784
Buildings and other depreciable property		149,993				140,042			154,997			153,671

		2,357,098				2,308,245			2,391,372			2,383,178
Accumulated depreciation		(473,708	)			(426,215	)		(506,443	)		(490,108	)
				��
Net investment in real estate	$	1,883,390			$	1,882,030		$	1,884,929		$	1,893,070


							As of
							March 31,			December 31,
Properties Held for Sale	September 30,			December 31,			2008			2007
	2007			2006
Investment in real estate:
Land	$	2,590		$	5,333		$	2,277		$	2,277
Land improvements		14,080			22,730			10,112			10,104
Buildings and other depreciable property		846			1,152			557			556

		17,516			29,215			12,946			12,937
Accumulated depreciation		(6,693	)		(9,594	)		(4,103	)		(4,103	)

Net investment in real estate	$	10,823		$	19,621		$	8,843		$	8,834


_(a)		The percentages shown approximate the Company’s economic interest as of ~~September 30, 2007.~~March 31, 2008. The Company’s legal ownership interest may differ.

_(b)		Voyager joint venture primarily consists of a 50% interest in Voyager RV Resort. Also included is a 25% interest in the utility plant servicing the Property and an adjacent parcel of vacant land.

_(c)		As of December 31, 2007, the Bar Harbor joint venture was consolidated with the operations of the Company as the Company determined that as of that date we are the primary beneficiary by applying the standards of FIN 46R.

_(d)		The Company ~~purchased~~received funds held for the ~~remaining interest~~initial investment in ~~two Diversified Investments in January 2007 and June 2007 (see Note 4 – Investment in Real Estate).~~one of the Morgan Properties during the quarter ended March 31, 2008.


																										JV Income for
							Investment		Investment		JV Income											Investment as of				Quarters Ended
		Number		Economic			as of		as of		for period ended						Number		Economic			March 31,		December 31,		March 31,			March 31,
Investment	Location	of Sites		Interest (a)			Sept. 30, 2007		Dec. 31, 2006		Sept. 30, 2007			Sept. 30, 2006		Location	of Sites		Interest_(a)			2008		2007		2008			2007
							(in thousands)		(in thousands)		(in thousands)			(in thousands)
Meadows	Various (2,2)		1,027		50	%	$	181	$	660	$	341		$	600	Various (2,2)		1,027		50	%	$	104	$	138	$	56		$	41
Lakeshore	Florida (2,2)		342		90	%		30		65		183			402	Florida (2,2)		342		90	%		80		61		691			68
Voyager																Arizona (1,1)		1,706		50	%_(b)		9,258		3,368		425			216
Maine Portfolio																Maine (0,0)_(c)		—		—			—		—		—			(205	)
Other Investments	Various (11,13)(b)		4,904		25	%		3,984		5,373		1,567			2,250	Various (9,10)_(d)		2,952		25	%		121		1,003		(288	)		1,199
Maine Portfolio	Maine (3,3)		495		60	%		11,593		8,620		(42	)		261

			6,768				$	15,788	$	14,718	$	2,049		$	3,513			6,027				$	9,563	$	4,570	$	884			1,319


Balance Sheets
	As of
	September 30,		December 31,
	2007		2006
Assets
Real estate, net	$	126,185	$	101,180
Other assets		10,523		9,063

Total assets	$	136,708	$	110,243


Liabilities & Equity
Mortgage debt & other loans	$	112,929	$	90,724
Other liabilities		12,554		10,108
Partners’ equity		11,225		9,411

Total liabilities and equity	$	136,708	$	110,243


Statements of Operations
	Quarters Ended				Nine Months Ended
	September 30,				September 30,
	2007		2006		2007			2006
Rentals	$	7,350	$	7,805	$	17,196		$	18,515
Other Income		915		1,439		3,235			4,760

Total Revenues		8,265		9,244		20,431			23,275

Operating Expenses		3,836		4,007		10,376			11,838
Interest		1,771		1,436		4,743			5,022
Other Expenses (Income)		437		682		(7,864	)		(3,173	)
Depreciation & Amortization		1,180		1,622		3,545			5,786

Total Expenses		7,224		7,747		10,800			19,473


Net Income	$	1,041	$	1,497	$	9,631		$	3,802


₍₁₎		Includes 849 and 860 new units as of March 31, 2008 and December 31, 2007, respectively.

₍₂₎		Includes 1,042 and 978 used units as of March 31, 2008 and December 31, 2007, respectively.

₍₃₎		Includes $0.3 million in discontinued operations as of March 31, 2008 and December 31, 2007.


₍₁₎		Total ~~sites as of September 30, 2007~~ includes ~~1,174~~655 sites from discontinued operations. ~~Total sites as of December 31, 2006 includes 1,581 sites from discontinued operations of which 407 sites sold in July 2007.~~

₍₂₎		~~Total sites as of December 31, 2006 includes 100 sites from discontinued operations, subsequently sold in January 2007.~~

~~(3)~~		All sites are currently leased to Privileged Access.

~~(4)~~₍₃₎		Joint Venture income is included in Equity in income of unconsolidated joint ventures.


₍₁₎		Includes third party home sales of 1424 and 1714 for the quarters ending ~~September 30,~~March 31, 2008 and 2007, ~~and 2006,~~ respectively.

₍₂₎		Includes third party home sales of zero and ~~seven~~11 for the quarters ending ~~September 30,~~March 31, 2008 and 2007, ~~and 2006,~~ respectively.


	Total			2007(2)			2008			2009			2010 (3)			2011			Thereafter			Total			2008 (2)			2009			2010 (3)			2011			2012			Thereafter
Long Term Borrowings (1)	$	1,671,353		$	29,538		$	209,687		$	86,286		$	326,175		$	65,032		$	954,635		$	1,631,182		$	206,941		$	85,763		$	315,268		$	65,013		$	18,005		$	940,192
Weighted average interest rates		6.13	%		7.50	%		5.68	%		7.00	%		7.16	%		7.07	%		5.62	%		6.04	%		5.72	%		7.01	%		6.68	%		7.07	%		5.93	%		5.59	%


₍₁₎		Balance excludes net premiums and discounts of ~~$3.0~~$2.1 million.

₍₂₎		~~Includes principal amortizations and one loan maturing in November 2007 for approximately $20 million.~~ We ~~are currently assessing our refinancing options for this loan.~~locked rate on $140.0 million financing with Fannie Mae.

₍₃₎		Includes lines of credit repayments in 2010 of ~~$98~~$82.1 million. We have an option to extend this maturity for one year to 2011.


	EQUITY LIFESTYLE PROPERTIES, INC.
Date: ~~November 9, 2007~~May 7, 2008	By:	/s/ Thomas P. Heneghan
		Thomas P. Heneghan
		~~President and~~ Chief Executive Officer (Principal executive officer)


Date: ~~November 9, 2007~~May 7, 2008	By:	/s/ Michael B. Berman
		Michael B. Berman
		Executive Vice President and Chief Financial Officer (Principal financial and accounting officer)